Carillion PLC: Fake It 'Til You Break It

The case “Carillion PLC: Fake It ‘Til You Break It” explores the recent collapse of Carillion, the second largest constructor in the United Kingdom, marking the largest trading liquidation known to date in the country. By exposing the company’s history from its start to its demise, the case looks into the specificities of operating the construction industry, as well as Carillion’s M&A activity, international expansion, bidding approach and financial policy. Emphasis is further given to the Corporate Governance issues that guided the company’s downfall. The supporting teaching note guides the analysis of the case, touching on several aspects related to Corporate Finance and Corporate Governance including: (i) the risk of overvaluation of companies and synergies in the context of M&A; (ii) pros and cons of debt issuance and the effects of operating under high leverage; and (iii) effectiveness of Corporate Governance entities, namely the Board of Directors, External Advisor and Investors.