Why restructuring adds value: leveraging to a bigger carrot
Article Abstract:
Leveraged restructuring of organizations creates greater corporate value by concentrating more control among fewer stockholders, initiating enhanced corporate efficiency and performance. When management and employees have equity or an equity-like position in the corporation, they have more incentive to improve corporate productivity. Their interests in the corporation more resemble the investors'. Installing a profit-sharing plan in place of a fixed wage schema improves productivity, as does an Employee Stock Ownership Plan (ESOP). ESOPs create an ownership interest for the present and future, as well as generating their own funding. ESOPs also build debt capacity and tax benefits. Leveraged equity purchase plans are similar incentive packages for management only.
Publication Name: Cashflow Magazine
Subject: Business
ISSN: 0196-6227
Year: 1988
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Why restructuring adds value: tax benefits of leverage
Article Abstract:
One of the reasons for the recent increase in corporate restructurings is that they lead to increased corporate market value. They also save taxes, bolster management incentives, better position the company, concentrate management thinking, staunch unproductive cash flow, eliminate non-performing business units, and better utilize assets. There are about 20 methods of restructuring, but they can be grouped as follows: asset restructurings, business unit restructurings, and corporate restructurings. Leveraged buyouts are notorious, but can be healthy for the economy in these ways: tax benefits, cash disgorgement, greater incentives for investors and management, forced sales of assets, and the need to compete efficiently.
Publication Name: Cashflow Magazine
Subject: Business
ISSN: 0196-6227
Year: 1987
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Why restructuring adds value: springboard to results
Article Abstract:
Running a public company as if it were privately-owned can create favorable results for stockholders. Corporate debt may be seen as a financial version of the industrial 'just-in-time' inventory control system, forcing on the management system a high level of discipline and fine-tuning. The experience of Health Corporation of America and its 'spinoff' organization Health Trust Inc is presented as an example of how debt can elicit a change in management motivation. Corporate restructuring issues addressed include bifurcation and elimination of cross subsidies.
Publication Name: Cashflow Magazine
Subject: Business
ISSN: 0196-6227
Year: 1988
User Contributions:
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