Corporate Structuring – When Your Business Needs an Overhaul
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Posted On :
May-25-2015
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Article Word Count :
506
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When a company has a diverse portfolio, there may come a time in its life that a part of it does not fit the corporation’s vision. This may happen for a number of reasons – administrational missteps, off the mark branding, brand new positioning and much more.
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When a company has a diverse portfolio, there may come a time in its life that a part of it does not fit the corporation’s vision. This may happen for a number of reasons – administrational missteps, off the mark branding, brand new positioning and much more. In such a scenario, businesses may opt for a major overhaul, which in corporate terms is called corporate restructuring. In other terms, it is the process of redesigning some or all of the aspects of a company. The following pointers deal with the types of restructuring that can happen within a corporate setting.
Expansion: When a company or part of it is taken over by another company, it results in a merger or acquisition. In this case, the whole company either comes under the shadow of its buyer or simply collaborates with another to form one identity. It can also choose a partner and carry out joint ventures with a potential future owner. Mergers play a huge role in helping companies consolidate markets or gain an edge in a volatile marketplace. Acquisitions can be a hostile form of take over.
Contraction: As the name suggests, contractions result in the company selling off part of their business for a number of reason. Some of the forms of contractions include equity carve outs, split-ups, spin offs, divestitures, demerger etc. In some cases, the company may officially split or demerge as a strategy or simply due to split in the management.
Change in Ownership: A company may either go private after being a public enterprise or be party to leveraged buyout. A leveraged buyout is an acquisition.
Some of the things that businesses need to ensure when restructuring are the company’s liquidity rate at the time of the implementation of the business. Accuracy of the forecasts of working capital to be generated, providing a clear channel of communication with all creditors who form the most vital part of the company, updating the business plan and its details. Some of the benefits that restructuring provides is a strategically favorable climate. The risk and operational costs are reduced and there is a huge scope in renewing the market entry and competition. It also brings with itself a number of tax benefits such as unabsorbed depreciation, government incentives and sales and excise exemptions.
Corporate restructuring is an extensive process and involves a lot of strategic planning and work. It requires careful management of new and old resources, the kind that only a professional can be able to handle in the best possible manner. For reasons such as these, companies normally hire a capital markets advisor to see through the whole process of restructuring. An ideal advisor has experience and a profound knowledge of the procedure of redefining the corporate structure. Restructuring can go a long way in transforming a business’ standing in the corporate world. However, a professional hand should help maximize the process and provide expert advice and analysis for helping settle the company in the new corporate environment.
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Article Source :
http://www.articleseen.com/Article_Corporate Structuring – When Your Business Needs an Overhaul _318848.aspx
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Author Resource :
Sandra Miller is the author of this article on Initial Public Offerings.
Find more information, about Joint ventures here
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Keywords :
Johnson International, Initial Public Offerings, Equity Raising, Capital Acquisition, Capital Markets Advisor,
Category :
Finance
:
Finance
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