Corporate Re-structuring

Corporate restructuring

Corporate restructuring is defined as any fundamental change in a company’s business or financial structure, designed to increase the company’s value. Corporate restructuring may be of following kinds:

• Financial restructuring
• Operational restructuring
• Technological Restructuring
• Market Restructuring
• Organizational Restructuring

Corporate restructuring usually involves changes in ownership, business mix, asset mix and alliances with a view to enhance shareholder value. So, such an exercise involves ownership restructuring, business restructuring and asset restructuring.

There may be various reasons to undertake a corporate restructuring exercise. These could be both internal and external to company. A company may restructure as a response to external factors such as increasing competition, to overcome slow growth and lower profitability within the industry or even to circumvent a government regulation. Alternatively, it may restructure due to internal reasons such as to utilize its underutilized physical, human and managerial resources, displace existing management, achieve diversification, achieve economies of scale with proportionately less capital investment, or more.

Corporate restructuring exercise may entail all a combination of following strategic tasks:

Independent business review: which usually covers an analysis of where are we, why are we not where we thought we’d be, where are we planning to go in the future, how realistic is our plan and what challenges are to be faced.

Options review: what are the different options exists; what are the pros and cons of each, and what would be most appropriate course.

Financial advice and arranging assistance: designing, negotiation, and implementation as per the situation.

Contingency planning: what is plan B if the consensual restructuring cannot be achieved? – a plan covering a variety of possibilities.

Corporate simplification: how to make the group structure simpler; reduce operating costs and, restructuring capital, etc.

Optimized exits: assisting in the design and execution of a controlled exit plan to preserve and maximize the value.

Business and operational restructuring: devisee, or review, such plans, or report on new progress and implementation.