What is Corporate Restructuring?

Corporate restructuring is a term used to denote a company's reorganization at the highest corporate level. This can also include legal status, ownership, operational, and financial restructuring to improve profitability and provide better organisation for the present and/or prepared for market changes. Often, preparation for the future is referred to as repositioning. Other reasons for restructuring include change of ownership or ownership structure, merger, acquisition, or divestiture.

Generally, however, corporate restructuring has come to mean reorganisation prompted by a period of unsatisfactory performance and declining profits caused by poor management, sudden market changes, or most recently world financial crisis. Debtors or equity holders (partners/shareholders) may force it. If under debt pressure (insolvency is a potential choice) restructuring usually then includes restructuring of debt as well as corporate reorganization.

Corporate restructuring is usually a long, drawn out process with probably the majority of the time involved with planning rather than actually implementing the restructuring decisions. Most importantly, restructuring a company is an often-difficult operation requiring a no nonsense approach and a willingness to face financial realities and prioritize difficult decisions.

Potential remedies include closure of facilities to reduce overhead, consolidation to eliminate duplicate administrative functions and personnel, divestment of under performing divisions, outsourcing costly services to reduce expenditures associated with in-house employees. Finally, one of management's most painful and difficult tasks, lay-offs are often essential for improving the profit picture.

In fact, in order to approach restructuring with dispassion a turnaround specialist is hired to help with restructuring or a new CEO to identify and make the difficult decisions required.

Alternatively, the first "outsourcing" decision is to bring in company experienced in restructuring as advisors and even decision makers. In any case, the fact is that the objectivity and a fresh point of view of an outsider are often essential. Companies specializing in restructuring offer skilled specialists able to evaluate the issues, both financial and operational, that adversely affect performance and formulate comprehensive plans and assist in there execution to address your businesses challenges.

When choosing a restructuring company look for experience and a wide range of capabilities with in-depth skills that integrate both financial and operational restructuring. The company should analyse and develop reorganization plans and alternative, provide interim management if necessary, and assess the insolvency process as restructuring option.

When all is said and done, restructuring is simply cutting costs, fixing what is broken, and strengthening what is not.