Corporate restructuring is a great opportunity to examine your business models and create a plan that will facilitate growth and optimize your business for the long term.
Corporate restructuring is a process that significantly modifies the financial and operational aspects of a company.
While this action is typically taken when a company is facing financial hardships, a company doesn’t have to be in distress to benefit from a restructuring plan.
A corporate restructure even when your business is successful can have major benefits!
Overall, corporate restructuring is done to modify a company’s operation, structure, or debt to limit financial harm or facilitate growth.
What Does Corporate Restructuring Involve?
During a corporate restructuring, the operations, departments, processes, or even ownership may change. However, this can enable a business to become more integrated and profitable.
The results of a corporate restructuring vary according to how the business operates and the reasons for making a change.
It could result in changes to procedures, networks, locations, and computer systems. It’s possible that jobs may be eliminated or employees laid off.
Corporate restructuring is a long and detailed process as both the internal and external structures of a business are altered and adjusted.
Once completed, however, business operations will become smoother and more economically sound putting the company in a better position to attain its goals.
4 Reasons Why You Should Consider Corporate Restructuring For Your Business:
Corporate structuring should not be undertaken lighting. To give you an idea of when it is necessary, here are some situations in which you should consider corporate restructuring:
1. Your Business is Expanding or Refocusing
The business world is dynamic and there’s no predicting when external factors can negatively impact a business or inspire it to change.
Changing the way a business operates through a corporate restructuring can help the business adapt to change.
For instance, the COVID-19 pandemic enforced the need for better telecommunication, improved working systems, revised employee policies, and the accommodation of remote working.
Many companies sought corporate restructuring to ensure that their business continued to thrive during this time.
Likewise, an expansion of a business requires a certain degree of reorganization. As a business grows, it may require setting up new departments, appointing new management, and developing different leadership styles – all of which can be achieved through corporate restructuring.
2. New Shareholders Are Being Brought In
When new shareholders are brought into your business, a company restructuring is necessary to ensure you retain total control of your business.
Restructuring can help you manage the way that dividends are allocated as well as protect your capital contribution to the company.
During the restructuring, you may want to consider issuing different classes to new investors so that voting rights are tailored in a way so that important decisions remain with you.
3. The Company is Becoming Publicly Traded
Companies can become publicly traded through two channels: IPO and Direct Listings.
During the IPO process, new shares of the company are brought to market by an investment bank. Direct listings involve employees selling their shares directly to the general public with no involvement from an investment bank.
Becoming a publicly-traded company is exciting but you don’t want to get too caught up in that excitement.
Instead, it’s important to consider how a corporate restructuring in this situation can help you optimize your stock decisions as you make a successful entrance into the public market.
4. Your Business is Under Corporate Financial Distress
Corporate restructuring can also be beneficial when your company is experiencing financial distress.
Seeking expert advice can help save your company when faced with the following challenges:
- Poor Competitiveness
- Stagnated Growth
- Significant Revenue Drop
- Shortage of Cash-Flow
- Poor Management
- Untethered Expenses
- Dependence on Debt
- Inefficient Business Structure
- Diminishing Customer Base
- Decline in Sales
When you can recognize the signs that your business is heading toward financial hardship, you can act quickly and implement a business restructuring that will allow you to restrategize and regain profitability.
Professional Corporate Restructuring Services
Restructuring an entire company is no easy task. However, our experts at Liu & Associates can help you create a customized path to help your business evolve and succeed.
By going over your current financial structure, our team can help you determine the best course of action, whether you are looking to downsize or expand.
Our corporate restructuring service includes changing legal ownership of a company, switching corporate tax structures, strengthening capital structures, and more!
Let us take care of planning and implementing your corporate restructuring plan.