Читать книгу Applied Mergers and Acquisitions - Robert F. Bruner - Страница 129

The motives for exit mirror those for entry: the adverse effects of industry turbulence; the need to exit from unattractive businesses. As Chapter 3 reveals, not all acquisitions are successes. And even for good businesses, the forces of competition, turbulence, and the life cycle can bring an end to a period of good performance. Jensen (1999) noted that “Exit problems appear to be particularly severe in companies that for long periods enjoyed rapid growth, commanding market positions, and high cash flow and profits.” (Page 583) He cited the reluctance of U.S. automobile tire manufacturers to close factories that produced the bias-ply tire when it became apparent that the radial tire product would displace it.

SHARPEN STRATEGIC FOCUS A portfolio of unrelated business activities requires senior management to master a wide variety of industrial concepts and to monitor disparate businesses. A portfolio organized around a focused strategy can exploit executive expertise in neighboring businesses. Weston (1989) argued that dismantling inefficient conglomerates was an important motive for divestitures and restructurings.

CORRECT “MISTAKES” AND HARVEST “LEARNING” Porter (1987) studied the acquisitions of diversified firms and found high rates of divestiture in the years following acquisition—on average, they divested 53 percent of their acquisitions within a few years. This implied to Porter a large failure rate in corporate acquisition. Weston (1989) replied that this rate of divestiture could be explained by a variety of effects such as antitrust enforcement and the harvesting of mature investments. He wrote, “Divestitures seem as likely to reflect past successes as mistaken attempts at diversification. Some are pre-planned for good business reasons. Some represent harvesting of sound investments. And some reflect organizational learning that contributes to improvements in future strategies…. Regardless of which version one accepts as the dominant explanation for divestitures—‘mistakes’ or ‘learning’—the persistently high numbers and values of such transactions constitute reliable evidence that the market system is working, ensuring the mobility of resources essential to the effective operation of an enterprise economy.” (Pages 75–76)

CORRECT THE MARKET VALUATION OF ASSETS Executives frequently complain that the stock market doesn’t understand their firms and that it is worth more than the current price suggests. Restructuring can monetize undervalued assets. The firm may contain business units to which investors attribute little or no value. Restructuring can help to establish a monetary value for those assets. If certain business units would be worth more standing alone, a restructuring can exploit a pure-play premium (avoid a diversification discount). Investors may have an appetite for single-segment firms—the common argument is that these kinds of firms are easier to understand, and permit the investor more easily to construct efficient portfolios of securities. Finally, there may be a known buyer to whom the assets or business unit are worth significantly more than to your firm. A restructuring can redeploy assets to higher-valued uses. Your firm may be operating an asset effectively, but there may be alternative uses for the asset that create even more value.

IMPROVE THE INTERNAL CAPITAL MARKET Diversified firms can suffer from failures in the internal capital market to allocate resources effectively—the most prominent kind of failure is the subsidization of inefficient units by efficient units. By shedding the inefficient operations, a restructuring program can eliminate the cross-subsidies.

OPTIMIZE FINANCIAL LEVERAGE AND REDUCE TAX EXPENSE Many restructurings that entail a change in capital structure for the firm seek to create value for shareholders by reducing the risk of default to acceptable levels or exploiting the tax deductibility of interest expense. The valuation of debt tax shields is discussed in more detail in Chapter 13, and Chapter 34 gives a detailed discussion of leveraged restructuring.

STRENGTHEN MANAGERIAL INCENTIVES/ALIGN THEM WITH THE INTERESTS OF SHAREHOLDERS Financial restructurings and leveraged buyouts often result in management holding a meaningful investment in the equity of the firm. This tends to focus management attention on the efficiency of the business and align their interests more tightly with those of the other equity investors.

RESPOND TO CAPITAL MARKET DISCIPLINE Financial underperformance by firms can trigger a range of reactions from capital markets, from adverse comments by journalists and securities analysts to depressed share prices, higher interest rates, shareholder proxy contests to replace the board of directors, and hostile takeover attempts. A defensive restructuring is a prominent response to capital market discipline. Chapter 36 describes the case of American Standard’s defensive restructuring.

GAIN FINANCING WHEN EXTERNAL FUNDS ARE LIMITED Firms with poor access to debt or equity markets may turn to the sale of assets to raise funds. Thus, divestiture may relax capital constraints. Consistent with this financing motive, Schlingemann et al. (2002) found that the liquidity of the market for the particular corporate assets is a significant determinant of which assets are likely to be divested. Kruse (2002) found that there is a greater probability of asset sales if the firm is performing poorly and suffers from low debt capacity.