Drilling Down on Breaking Up

After a spin-off, a debt restructuring, an acquisition, a dividend and a transfer of cash, shareholders of Alberto-Culver found themselves to be the majority owner of Regis. Still, how the stock of either company should be valued required spreadsheet calculations that would have daunted a banker. Alberto-Culver, whose major subsidiary was billed in most media reports as the asset being acquired, saw its stock swing from $50.62 to $45.60 during the session, before closing at $46.55, a 3% drop on the day. Regis' shares traded between $39.52 and $43.49 before closing at $42.59, an 8% rise.

While no investor can ever be as knowledgeable as the investment bankers who might have worked for months on any given transaction, investors still need to be able to tell one deal from another.

"The company's focus is the most valuable. We can't say exactly whether the refocusing of a firm matters more than unlocking hidden value. That will be specific to each situation," says Bruner. "What we can say is that not only should the market pay attention to the near-term effect, but also to the signals each company gives about its future plans."