Corporate Restructuring

Corporate 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. Alternate reasons for restructuring include a change of ownership or ownership structure, demerger, or a response to a crisis such as positioning the company to be more competitive, survive a currently adverse economic climate, or poise the corporation to move in an entirely new direction or major change in the business such as bankruptcy, repositioning, or buyout. Restructuring may also be described as debt restructuring and financial restructuring.
Financial restructuring
It may take place in response to a drop in sales, due to a sluggish economy or temporary concerns about the economy in general.
Actions to be taken: • When this happens, the corporation may need to reorder finances as a means of keeping the company operational through this rough time. • Costs may be cut by combining divisions or departments, reassigning responsibilities and eliminating personnel, or scaling back production at various facilities owned by the company. • With this type of corporate restructuring, the focus is on survival in a difficult market rather than on expanding the company to meet growing consumer demand.
People who do 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.
Reasons for restructuring: • Restructuring a corporate entity is often a necessity when the company has grown to the point that the original structure can no longer efficiently manage