Opleiding: Distressed Restructuring and Turnaround Management
In the Distressed Restructuring and Turnaround Management program, you will be exposed to a conceptually challenging curriculum, exploring both the theoretical basis and practical application of the major elements of right-sizing the capital structure, turning around the business, and investing in distressed situations.
Turning around and valuing the business
This will include the fundamentals of value investing, including being able to estimate the fundamental, intrinsic, value of the underlying business using discounted cash flow valuation. As the value of the business depends entirely on how it will be managed, we will consider the turnaround potential for the business and identify likely scenarios for the future performance of the company to serve as the basis for the restructuring.
Right-sizing the capital structure
Once the cash needs and generation potential are assessed, the debt capacity will be examined, which will build upon the company cash flow analysis to estimate whether, when and on which debt securities the business is expected to default. With the debt capacity understood, we will then ask what alternative capital structures will ‘fit’ the business, and then ask what hurdles and solutions might exist to help us realize the financial restructuring of the liabilities. This will require an assessment of the likely restructuring and turnaround proposals, such as amendments to extend maturity, debt for equity exchange offers, or seeking protection in the legal insolvency/restructuring regime. There will be some discussion of the legal environment (including a base understanding of the US Chapter 11 and similar regimes in other countries), as well as an examination of the game theoretic behaviors which will impact both the restructuring of the business and the deal-making across the capital structure.
Developing an investment thesis
We will examine the content of the typical ‘cap table’ which provides a ‘snapshot’ of the financial situation and perform a ‘waterfall’ analysis to assess where the value will ‘fall’ in the capital structure in order to understand which security might be most or least interesting as an investment option based upon the difference between current market price and intrinsic value. Once we have identified the potential investment opportunity, we will develop the investment thesis for a given security.
Finally, as negotiation is an essential skill of the distressed investor, we will also highlight the important ‘soft skills’ associated with earning an exceptional return on investment in special situations.
How you will benefit
- Understand the key success factors to turning around a distressed situation
- Appreciate the hurdles and solutions to restructuring the liabilities in order to buy time for the turnaround
- Assess both financial restructuring and business turnaround and their integration
- Learn about the legal environment in distressed situations
- Explore the game theory behind investing and restructuring in distressed situations
- Explore the theory and practical application of investing in distressed situations
- Develop a thorough understanding of the fundamentals of value investing
- Estimate the fundamental value of a business using discounted cash flow valuation
- Examine debt capacity and its implications for investors
- Learn to use the content of the typical capitalization table
- Gain the skills to perform a ‘waterfall’ analysis
- Identify potential investment opportunities
- Practice with building an investment thesis
- Improve your negotiation skills to earn an exceptional return on investment in special situations
