A week in Harvard - Corporate Restructuring and Shareholder value

Day two was spent with Stuart C. Gilson who's been a professor of finance in Harvard Business School since 1991. He's an expert in valuation, corp finance and corp restructuring. One of this teachings that stuck with me was that running a company is like keeping in shape. You need to get on the treadmill every morning, because trying to get into shape by taking a crash action once a year will be very painful. In the same way, trimming the corp structure continuously will keep the company in good shape.

Funnily, when professor Gilson started running his course, it was named Corporate Restructuring. Only very few students took his class. When he changed the name into "Creating Value through Corporate Restructuring" the number of students in his class grew by six fold. The message in changing the name is similar to the treadmill comparison, corporate restructuring is not something that is done only in an extreme crisis situation, but should be something responsible managers look into all the time.

Lately, sadly, corp restructuring has been much needed for these exact crisis situations. In 2008, the value of Chapter 11 filings has grown to be 900 billion dollars. This is roughly 10 times higher than in previous years.

A reason to restrucure can be a value gap in one of the following

  • needing improvement in performance,
  • needing support in changing a strategy, or
  • reduce information gaps

Most of the day was spent unwrapping interesting evaluation cases on Seagate Technology buyout, Scott paper company, and restructuring at Delphi corporation. They were each completely different cases, but all in the end showed that while evalution isn't necessarily easy, but it's always doable in the end.

My plan tonight was to go for a walk at the MIT campus area and their bookstore, but the time difference and long day has totally worn me out. Another day, then.

Posted by Petra S at 10/7/2009 1:27 AM
Categories: Human Stuff
Tags: Human
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