Everyone Getting Obsessed With the Corporate Restructuring Funda
Restructuring is the corporate management term for the act of partially dismantling and reorganizing a company for the purpose of making it more efficient and therefore more profitable. It generally involves selling off portions of the company and making severe staff reductions.
Restructuring is often done as part of a bankruptcy or of a takeover by another firm, particularly a leveraged buyout by a private equity firm. 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.
When a company is having trouble making payments on its debt, it will often consolidate and adjust the terms of the debt in a debt restructuring. After a debt restructuring, the payments on debt are more manageable for the company and the likelihood of payment to bondholders increases. A company restructures its operations or structure by cutting costs, such as payroll, or reducing its size through the sale of assets.
This is often seen as necessary when the current situation at a company is one that may lead to its collapse. 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 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.
In US education system, restructuring refers a requirement in the No Child Left Behind act of 2001, which requires schools identified as chronically failing for 5 years or more to undertake rapid changes that affect how the school is led and instruction delivered.
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.
Steps[/b]:
Ensure the company has enough liquidity to operate during implementation of a complete restructuring
Produce accurate working capital forecasts
Provide open and clear lines of communication with creditors who mostly control the company's ability to raise financing
Update detailed business plan and considerations
Cash management and cash generation during crisis
Impaired Loan Advisory Services (ILAS)
Retention of corporate management sometimes "stay bonus" payments or equity grants
Sale of underutilized assets, such as patents or brands
Outsourcing of operations such as payroll and technical support to a more efficient third party
Moving of operations such as manufacturing to lower-cost locations
Reorganization of functions such as sales, marketing, and distribution
Renegotiation of labor contracts to reduce overhead
Refinancing of corporate debt to reduce interest payments
A major public relations campaign to reposition the company with consumers
Forfeiture of all or part of the ownership share by pre restructuring stock holders
Corporate restructuring is the process of redesigning one or more aspects of a company. The process of reorganizing a company may be implemented due to a number of different factors, 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. Here are some examples of why corporate restructuring may take place and what it can mean for the company.
Characteristics of Corporate Restructuring – Corporate restructuring usually includes the use of underutilized assets, like patents or brands which have not been properly utilized by the company, retention or downsizing of staff, streamlining certain processes, division or functions within the organization.
Companies facing financial setbacks also consider moving of manufacturing or production units into low-cost facilities or locations. Labor costs are renegotiated to reduce overheads and staff is downsized to bare minimum. Human Resources, Payroll, Technical Staff and other Support functions are outsourced to third party vendors who specialize in the given fields to lower costs and to improve efficiency.
In case of mergers or acquisitions, the extra divisions are removed or repositions to improve efficiency and to cut duplication of work and extra overheads.
Companies which are looking at turning their image around, or launching a new product, also indulge in major Public Relations campaigns in order to reposition the organization with consumers. Corporate restructuring usually comes hand in hand with several changes in the management.
Restructuring is the corporate management term for the act of partially dismantling and reorganizing a company for the purpose of making it more efficient and therefore more profitable. It generally involves selling off portions of the company and making severe staff reductions.
Restructuring is often done as part of a bankruptcy or of a takeover by another firm, particularly a leveraged buyout by a private equity firm. 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.
When a company is having trouble making payments on its debt, it will often consolidate and adjust the terms of the debt in a debt restructuring. After a debt restructuring, the payments on debt are more manageable for the company and the likelihood of payment to bondholders increases. A company restructures its operations or structure by cutting costs, such as payroll, or reducing its size through the sale of assets.
This is often seen as necessary when the current situation at a company is one that may lead to its collapse. 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 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.
In US education system, restructuring refers a requirement in the No Child Left Behind act of 2001, which requires schools identified as chronically failing for 5 years or more to undertake rapid changes that affect how the school is led and instruction delivered.
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.
Steps[/b]:
Ensure the company has enough liquidity to operate during implementation of a complete restructuring
Produce accurate working capital forecasts
Provide open and clear lines of communication with creditors who mostly control the company's ability to raise financing
Update detailed business plan and considerations
Cash management and cash generation during crisis
Impaired Loan Advisory Services (ILAS)
Retention of corporate management sometimes "stay bonus" payments or equity grants
Sale of underutilized assets, such as patents or brands
Outsourcing of operations such as payroll and technical support to a more efficient third party
Moving of operations such as manufacturing to lower-cost locations
Reorganization of functions such as sales, marketing, and distribution
Renegotiation of labor contracts to reduce overhead
Refinancing of corporate debt to reduce interest payments
A major public relations campaign to reposition the company with consumers
Forfeiture of all or part of the ownership share by pre restructuring stock holders
Corporate restructuring is the process of redesigning one or more aspects of a company. The process of reorganizing a company may be implemented due to a number of different factors, 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. Here are some examples of why corporate restructuring may take place and what it can mean for the company.
Characteristics of Corporate Restructuring – Corporate restructuring usually includes the use of underutilized assets, like patents or brands which have not been properly utilized by the company, retention or downsizing of staff, streamlining certain processes, division or functions within the organization.
Companies facing financial setbacks also consider moving of manufacturing or production units into low-cost facilities or locations. Labor costs are renegotiated to reduce overheads and staff is downsized to bare minimum. Human Resources, Payroll, Technical Staff and other Support functions are outsourced to third party vendors who specialize in the given fields to lower costs and to improve efficiency.
In case of mergers or acquisitions, the extra divisions are removed or repositions to improve efficiency and to cut duplication of work and extra overheads.
Companies which are looking at turning their image around, or launching a new product, also indulge in major Public Relations campaigns in order to reposition the organization with consumers. Corporate restructuring usually comes hand in hand with several changes in the management.