Corporate Restructuring: Understanding Processes

Corporate restructuring pertains to the implementation of reorganization in a company from the highest hierarchy going down. This corporate decision can affect areas such as ownership, operations, legal status and financial structure.

This decision is aimed at improving the profitability and reducing unnecessary expenditures to save a corporation.

Although corporate restructuring does not always mean that something needs to be done to save a company. More often than not, it is a decision that allows for better organization that can be a result of some market demands and changes. When this happens, the more common term used is repositioning.

Aside from this, restructuring can also be a result of the change of ownership of a corporation or if the owners are still the same, it can be because of a change in the ownership structure. There are some cases when the board of directors or executives would rotate in their main responsibilities by handling different departments every year or every quarter, depending on what was agreed upon.

With such changes, there are legal implications that need to be considered. The best way to implement this is to consult business law experts and be guided by the rules and laws on implementing such transactions.

Mergers and acquisition can also result to corporate restructuring. The merging companies will come up with a new structure and this should be in accordance with the M & A agreement. Hence, it is necessary to have legal advice and opinion before making moves to make sure that all decisions are in accordance with all contracts associated with the M & A.

Generally, when corporate restructuring is considered, it is a result of an observed timeline of financially unacceptable performance that can be attributed to mismanagement, changes in market conditions or financial crisis. When this happens, the restructuring process will not just involve management restructuring.

It can also result to debt restructuring to make sure that the company will still be viable and sustainable given the prevailing financial and market conditions. Negotiations with debtors or equity holders can transpire to arrange financial viabilities. This is best discussed and handled by a business legal service for a favorable and clear agreement to be settled.

The process of corporate restructuring can be a long one depending on the size of the organization. The planning sessions involved will be rigid so all the aspects of business are touched to align with the new objectives and goals. Priorities will have to be set and timetables need to be defined. Further, deliverables and new job descriptions are defined for the clear implementation of the reorganization process. When a company enters this situation, the guidance and assistance of business legal services will be indispensable.

A reliable law firm is what can make things easy and organized when corporate structuring is implemented. Difficult decisions can be rationalized with the legal perspective being highlighted.

The pros and cons of specific steps and actions as well as implications of different actions will be carefully noted for the appreciation and understanding of management.


11 April 2012