Clients typically rely on our corporate restructuring services if they experience deteriorating performance, have liquidity concerns, or have experienced the loss of key management or customers. In each case, we have the skills to manage international restructuring, whilst also expertly managing relations with trade unions and other labour representatives. We lead corporate boards and all other stakeholders through restructuring plans. These plans include downsizing, outsourcing, moving key functions to other countries and both the acquisition of businesses and their sale.
Restructuring is the corporate management term for the act of reorganizing the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable, or better organized for its present needs. Other reasons for restructuring include a change of ownership or ownership structure, demerger, or a response to a crisis or major change in the business such as bankruptcy, repositioning, or buyout. Restructuring may also be described as corporate restructuring, debt restructuring and financial restructuring.
Executives involved in restructuring often hire financial and legal advisors to assist in the transaction details and negotiation. It may also be done by a new CEO hired specifically to make the difficult and controversial decisions required to save or reposition the company. It generally involves financing debt, selling portions of the company to investors, and reorganizing or reducing operations.The basic nature of restructuring is a zero-sum game. Strategic restructuring reduces financial losses, simultaneously reducing tensions between debt and equity holders to facilitate a prompt resolution of a distressed situation.
Corporate debt restructuring is the reorganization of companies’ outstanding liabilities. It is generally a mechanism used by companies which are facing difficulties in repaying their debts. In the process of restructuring, the credit obligations are spread out over longer duration with smaller payments. This allows company’s ability to meet debt obligations. Also, as part of process, some creditors may agree to exchange debt for some portion of equity. It is based on the principle that restructuring facilities available to companies in a timely and transparent matter goes a long way in ensuring their viability which is sometimes threatened by internal and external factors. This process tries to resolve the difficulties faced by the corporate sector and enables them to become viable again.
The Process Of Organisational Restructuring
Many large, international corporations are like huge sea tankers carrying oil. It is difficult to change their collision course quickly and avoid hitting objects that stand in your way or react properly to unexpected market circumstances.
Large organisations tend to follow routine, gain “organisational fat” and play the same game that made them successful in the past. However, the global market and consumer trends evolve so quickly that corporations cannot afford to do business as usual. If they want to play big roles in the market or even survive, they have to firm organisational restructuring processes in place.
Business restructuring (or organisational restructuring) is a process that can address a company’s unsatisfactory status quo in the constantly evolving market. It should be based on proper strategic planning, fuelled by innovation, or it can be a tactical reaction to unexpected circumstances.
The final sections of this article will detail some real life case studies of restructuring I encountered during my time as CEO of Nike Poland.
How To Make Restructuring Work for Your Company
Restructuring is more likely to be successful when managers first understand the fundamental business/strategic problem or opportunity that their company faces. At Humana Inc., which jointly operated a hospital business and a health insurance business, management decided to split the businesses apart through a corporate spin-off because it realized the businesses were strategically incompatible—the customers of one business were competitors with the other. Alternative restructuring options that were considered, including issuing tracking stock, doing a leveraged buyout, or repurchasing shares, would not have solved this underlying business problem.
Chase Manhattan Bank and Chemical Bank used their merger as an opportunity to both reduce operating costs and achieve an important strategic objective. Combining the two banks created opportunities to eliminate overlaps in such areas as back-office staff, branch offices, and computing infrastructure. Management of both banks also believed that larger and more diversified financial institutions would increasingly have a comparative advantage in attracting new business from corporate and retail customers. The merger was therefore also viewed as a vehicle for increasing top-line revenue growth. Internal cost cutting alone would not have enabled either bank to achieve this second goal.
Strategies for Corporate Restructuring using an Org Chart | Organimi
As businesses enter new life cycles, they often need restructuring or reorganization for a number of reasons. An organizational chart may need to undergo a periodic overhaul in order to: address a critical performance problem, unlock an opportunity to increase revenue for shareholders, expand, downsize, or due to a merger and acquisition. Whether you’re a growing startup or an established company, you will require an organizational restructure sometime down the road.
Deciding on strategies to help you achieve your organizational goals is not a clear cut process to be taken lightly. Below are some key strategies to help navigate this inevitable process, that all companies face at some point, when changing their organizational structure to meet strategic demands of the future.
Corporate Restructuring – Understanding Processes
Corporate restructuring pertains to the implementation of reorganization in a company from the highest hierarchy going down. This corporate decision can affect areas such as ownership, operations, legal status and financial structure.
This decision is aimed at improving the profitability and reducing unnecessary expenditures to save a corporation.
Although corporate restructuring does not always mean that something needs to be done to save a company. More often than not, it is a decision that allows for better organization that can be a result of some market demands and changes. When this happens, the more common term used is repositioning.
Aside from this, restructuring can also be a result of the change of ownership of a corporation or if the owners are still the same, it can be because of a change in the ownership structure. There are some cases when the board of directors or executives would rotate in their main responsibilities by handling different departments every year or every quarter, depending on what was agreed upon.
With such changes, there are legal implications that need to be considered. The best way to implement this is to consult business law experts and be guided by the rules and laws on implementing such transactions.