Planning and Strategy: formula sheet

Key formulas

Definition

Corporate restructuring = planned change in capital structure, ownership, organisation or business portfolio to improve value, efficiency or survival

Use this as the opening line of any answer.

Three-form classification

Financial + Organisational + Portfolio (business) restructuring

Portfolio restructuring splits into expansion (merger, amalgamation, acquisition) and contraction (demerger, divestiture, slump sale, buyback in some treatments).

Synergy idea

Value of combined firm > Value of firm A + Value of firm B

A rule of motivation, not a guarantee. Synergy is the expected gain; it may not materialise.

Strategic planning sequence

Vision and mission → Environmental and internal analysis → Objectives → Alternatives → Evaluation and choice → Implementation → Monitoring and review

Use this as the skeleton for any 'explain the process' question. Wording of stages may vary, but the logical order stays.

Test for a good objective

Specific + Measurable + Achievable + Relevant + Time-bound (SMART)

Use it when asked how to set objectives for a restructuring.

Alignment test

Does the restructuring move the company closer to its vision and corporate strategy? If not, reconsider.

This is a rule of thumb for evaluating options, not a statutory rule.

Evaluation criteria for options

Strategic fit, financial impact, risk, legal and regulatory feasibility, tax effect, stakeholder impact, time and cost

Use these as headings when comparing alternatives.

Purpose of due diligence

Verify facts → identify risks → adjust price and terms → decide: proceed, renegotiate or withdraw

Use this as the one-line logic of any answer.

Four core types

Financial + Legal + Commercial + Tax

Add operational, HR, environmental and IT as other types where the facts suggest them.

Process sequence

Planning → Checklist and data room → Review and verification → Report → Negotiation and decision → Post-deal follow-up

Names of stages vary by author. Keep the logical order.

Share exchange ratio

Exchange ratio = Value per share of transferor ÷ Value per share of transferee

Gives the number of transferee shares issued for each transferor share. Both values must come from a consistent valuation method.

Value per share

Value per share = Equity value ÷ Number of equity shares

Use equity value after deducting debt, not enterprise value.

Capital gain on slump sale (idea)

Gain = Slump sale consideration − Net worth of the undertaking

Net worth is computed as the tax law prescribes. Check the Income-tax Act, 2025 for the exact rules.

Quick revision

• Corporate restructuring means changing a company's structure, ownership, operations or finances to improve value or meet a goal.
• Know the main forms: expansion, contraction, and change in ownership or control.
• Planning starts with a clear objective, then compares options and tests feasibility.
• Check approvals, cost, timing and stakeholder impact before choosing a route.
• Due diligence tests legal, financial, tax, commercial and compliance risk.
• Red flags found in due diligence can change price, terms or the decision itself.
• Valuation supports the price; structure decides how the deal is paid and carried out.
• Deal structuring considers tax, regulatory approvals, funding and stakeholder interests.
• Implementation needs a timeline, responsibilities and compliance filings.
• Integration covers people, systems, culture and governance after the deal.
• Write case answers in order: provision, analysis of facts, conclusion.

Common mistakes

• Treating restructuring as only mergers and acquisitions. Fix: State all three families. Show that financial and organisational changes are also restructuring.
• Placing buyback or capital reduction under organisational restructuring. Fix: Ask what changes. If it is capital or debt, it is financial. If it is management or structure, it is organisational. If it is businesses owned, it is portfolio.
• Describing restructuring forms but not the planning process Fix: Begin with the planning stages and mention forms only when comparing options.
• Setting vague objectives such as 'improve performance' Fix: State a measurable target and a time frame, drawn from the facts in the case.
• Treating due diligence as only a financial audit. Fix: Always cover legal, commercial and tax types too, and mention others where the facts point to them.
• Listing types without applying them to the case. Fix: For each type, name what you would check in this company, using the facts in the question.
• Listing the five factors in general terms without using the facts given. Fix: Tie every factor to a fact in the question, such as the buyer being listed or the seller being a foreign company.
• Saying every merger or demerger is automatically tax free. Fix: Say tax neutrality applies only if the conditions in the tax law are met, and name the conditions you are relying on.
• Treating the Tribunal order as the end of the restructuring. Fix: Always add the integration and monitoring phase after the order and filings.
• Listing challenges without remedies. Fix: Pair every challenge with a practical action, such as retention plans for key staff.

Exam tips

• Always open with a definition and a three-way classification. It earns marks even if the rest is partial.
• In case questions, tie every tool to a fact in the question. Do not list tools without a reason.
• Use real examples of tools under each form so the examiner sees you can tell the forms apart.
• Add one line on approvals and the Company Secretary's role. This is the practical point examiners look for.
• Show both benefits and risks in the conclusion. A balanced view scores better than a one-sided one.
• Answer in the order of provision, analysis and conclusion, and use the case facts in every step.
• Use headings such as objectives, options, recommendation and implementation to make the answer easy to mark.
• Always state the link between the chosen restructuring and corporate vision and strategy.