Restructuring

Restructuring is a type of corporate action taken when significantly modifying the debt, operations or structure of a company as a means of potentially eliminating financial harm and improving the business. Restructuring can also be described as corporate restructuring, debt restructuring and financial restructuring.

Overview

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 company to sell off portions of the company to investors, and usually involves financing debt.

Types of Restructuring

Restructuring can be broken down into two types: financial restructuring and operational restructuring.

Financial Restructuring

Financial restructuring involves the reorganization of a business' assets and liabilities. The most common form of financial restructuring is the process of selling off portions of the company to investors.

Operational Restructuring

Operational restructuring may involve making changes to the overall structure of the company. This could include reducing staff, changing the way the company is organized, or other changes to reduce costs and increase efficiency.

Reasons for Restructuring

Companies may undergo restructuring for various reasons, such as to streamline its operations, to concentrate on its core business, or to free up capital for new investments.

See Also

• Corporate Action
• Debt Restructuring
• Financial Crisis
• Bankruptcy

References

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