THE MOST IMPORTANT MOTIVES1. STRENGTHENING INCENTIVES2. ACHIEVING A BETTER BUSINESS FIT3. SHARPENING MANAGEMENT FOCUS4. CREATING PURE PLAYS THAT HAVE UNIQUE

INVESMENT APPEAL5. CURTAILING AN UPPRODUCTIVE

REINVESMENT OF CASHFLOW6. ELIMINATING SUBSIDIES FOR

UNDERPERFORMING BUSINESS7. ACHIEVING A HIGHER VALUED USE FOR

ASSETS8. SAVING TAXES

RESTRUCTURING METHODS1. ASSET RESTRUCTURING are techniques that change the

ownership of the assets that support a business. These methods include the use of partnerships or trust to save taxes, discharge surplus cashflow and split companies into more productive business unit.

2. BUSINESS UNIT RESTRUCTURING can increase value in 3 ways : (a) by promoting growth through acquisitions, JV or offering a subsidiary’s shares to public (b) by separating business unit from the firm through a sale, spin-off, split-off or partial liquidation (c) by undertaking an internal leverage recapitalization

3. CORPORATE RESTRUCTURING change the ownership structure of the parent company through : (1) issue of a new form of debt, preferred stock or common stock (2) share repurchase (3) leverage ESOP (4) Leverage cash out or LBO (5) complete sales, liquidation or split up of the firm

4. CONVENTIONAL METHOD : INCREASING LEVERAGE

INCREASING LEVERAGEAS A RESULT OF :LBOSHARE REPURCHASES, RECAPITALIZATIONDEBT-FINANCED ACQUISITIONPROLIFERATION OF JUNK BONDS

USE OF DEBT HAS POSITIVE FORCE OF ECONOMYDEBT IS CHEAPER THAN EQUITY (TAX

DEDUCTIBLE)DEBT-FINANCED RECAPITALIZATION CAN

STRENGTHEN INCENTIVES FOR INVESTOR TO MONIYOR THEIR INVESMENT

TO RETIRE DEBT, A COMPANY MAY BE FORCED TO FORGO UNPROFITABLE INVESMENT AND TO SELL UNDERPERFORMING OR UNRELATED ASSETS OR BUSINESS TO MORE PRODUCTIVE OWNERS

TAX BENEFITCASH DISGORGEMENT

Repurchase SharesLeveraged Share RepurchasesPartnershipLeverage acquisitionsDividens

INCENTIVESInvestor IncentivesIncesntives for Management and EmployeeNo Guts-No GloryProfit SharingESOPLeveraged Equity Purchase Plan