Usually these activities result in some form of major cost-cutting (normally a reduction in personnel employed) and frequently changes in the management team.
Corporate restructuring is usually a painful and difficult task even for the most accomplished management team to achieve successfully. Most corporate restructuring fails either because the measures taken are inadequate or because the timing is wrong. Good examples here occur in cyclical industries such as banking or aviation where a company makes a mistake by over-expanding too much in some particular aspect of its business. A new management team is brought in to restructure the business and promptly disposes of part of the business at a distressed price only to find that shortly after the transaction has been completed the sold activities begin to rise significantly in value as the market up cycle begins again.
Corporate restructuring is nearly always a costly financial process as it results in a write-down in the book value of assets and often involves large compensation payments for forced employee dismissals. Thus in situations where corporate restructuring is required it is important to get both the process and implementation right.
Why do Corporate Restructuring?
In short corporate restructuring can usually be avoided if a company is well managed by a strategically aware management team. However, there may be exceptions here where such a company sees opportunities to profitably conduct merger and acquisition through re-organisation of other businesses.
Most corporate restructuring takes place as a last resort when all other attempts to manage the business have failed.
Source: http://www.mspsolutions.com/services/corporaterestructuring.html
 Creating Value Through Corporate Restructuring:
Case Studies in Bankruptcies, Buyouts, and Breakups
Resources:
Corporate Financial Restructuring, Prof. Ian Giddy, New York University; PDF Download |
