We advice Corporate Restructuring for our corporate clients. Corporate restructuring is a corporate action taken to significantly modify the structure or the operations of the company. This usually happens when a company is facing significant problems and is in financial jeopardy.
Corporate Restructuring happens through mergers, acquisitions, amalgamations and takeovers. While merger means “to combine”, Acquisition means “to acquire.” Merger alludes to the combination of two or more firms, to form a new company, either by way of amalgamation or absorption. Acquisition or otherwise known as takeover is a business strategy in which one company takes the control of another company.
- Financial Restructuring: The Financial Restructuring may take place due to a drastic fall in the sales because of the adverse economic conditions. Here, the firm may change the equity pattern, cross-holding pattern, debt-servicing schedule and the equity holdings. All this is done to sustain the profitability of the firm and sustain in the market. Generally, the financial or legal advisors are hired to assist the firms in the negotiations.
- Organizational Restructuring: The Organizational Restructuring means changing the structure of an organization, such as reducing the hierarchical levels, downsizing the employees, redesigning the job positions and changing the reporting relationships. This is done to cut the cost and pay off the outstanding debt to continue with the business operations in some manner.
The need for a corporate restructuring arises because of the change in company’s ownership structure due to a merger or takeover, adverse economic conditions, adverse changes in business such as bankruptcy or buyouts, over employed personnel, lack of integration between the divisions, etc.