Restructuring of Business

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Corporate restructuring refers to reorganization of an organization or group of organizations through the movement of assets within the organization or between companies within a group, or dividing an organization into a new group structure, or when an existing group becomes a smaller number of organizations. Restructuring is usually done when organizations feel the need for a change. Some of the common reasons for corporate restructuring include preparation for the addition of a new business, usually by acquisition or expansion; accommodation of a newly-added business by rearranging the business structure; improvement of management and/or financial structure to increase efficiency in operations; preparation for some part of the company to be sold; if there is a risk involved, to spread it; and serve as a recovery plan for a company with financial difficulties. Even if restructuring seems to be an internal procedure, it is advisable that the restructuring process be carried out formally and with proper documentation so that it can prove and stand up to outside scrutiny and to minimize risk when there are transfers of assets from one group company to another.

Corporate restructuring or reorganization means that a company undergoes reorientation to cope up with the change in the business industry and other environments for the reason of sustaining competitive advantage. The restructuring aims to make the company more efficient and more profitable. It becomes a strategic move when there is a need to manage bankruptcy and affect a turnaround for the company. The principal drivers behind ...