Attributes of Effective

Acquisitions
Attributes Results
Low-to-Moderate Debt Merged firm maintains financial
flexibility

Sustained Emphasis on Continue to invest in R&D as

Innovation part of the firm’a overall
strategy
Flexibility Has experience at managing
change and is flexible and
adaptable
Restructuring

A strategy through which a firm changes its

sets of businesses or financial structure
 Restructuring strategies

1. Downsizing
2. Downscoping
3. Leveraged buyouts
Types of Restructuring:
Downsizing
A reduction in the number of a firm’s employees
and is sometimes in the number of its operating
units.
 Typical reasons for downsizing:
1. Expectation of improved profitability fromcost
reduction.
2. Desire or necessarily for more efficient
operations.
Types of Restructuring:
Downscoping
A divestiture, spin-off or other means of
eliminating businesses unrelated to a firm’s
core businesses.
A set of actions that causess a firm to
strategically refocus on its core
Restructuring: Leverage Buyouts
(LBO)
A rescunstring strategy whereby a party
buys all of a firm’s assets in order to take
the firm private.
 Can correct for managerial mistakes.
 Can participate entrepreneurial efforts and
strategic growth.
Restructuring and Outcomes
Short-term Outcomes. Long-term Outcomes
Althernatives
Reduced
labor costs

Downsizing Reduced
debt costs

Emphasis on
Downscoping strategic
controls

Leverage High debt

Buyouts costs