Restructuring of enterprises and companies Share Facebook -> Twitter -> Youtube -> Telegram -> Facebook Twitter VK Youtube -> Telegram ->

In other words, restructuring is resorted to when the previous order of work has ceased to function effectively, profit has decreased, and receivables and payables have appeared.

The restructuring process has several stages:

  • Purpose of restructuring. At this stage, goals are set, planning an order of actions and setting goals. Stakeholders decide what they want to see in the end result.
  • Diagnostics. The company's problems, strengths and weaknesses, the level of financial condition are disclosed. Prospects for further development are outlined.
  • Restructuring strategy and program. Taking into account the data obtained, a specific plan is being developed according to which the enterprise will develop. Several ways of further development are put forward.
  • Restructuring. According to the planned path, the restructuring process is carried out, all points of the worked out plan are implemented and in case of deviation, an adjustment is made.
  • Evaluation of results. At the final stage, the results are evaluated.

Restructuring Forms

  • operational form;
  • strategic form.

The operational form is to change the company's activities, the main goal of which is financial improvement. This happens in cases where the enterprise is in critical condition. The reorganization is carried out in a short time with planning of further actions to overcome the crisis. It is carried out at its own expense.

The strategic form of restructuring is aimed at improving the investment opportunities of the enterprise. It aims to attract external funding sources. The ultimate goal of such a reorganization of the enterprise: the growth of competitiveness, market value.

Types of restructuring

  • Merge. This form of restructuring implies the merger of enterprises, while the previously existing organizations are liquidated, and a new legal entity is formed.
  • Attach. The rights and obligations of one legal entity are transferred to another, which continues to operate.
  • Separation. One enterprise is split into several organizations, while all rights are distributed among them.
  • Selection. Part of the rights of one organization is transferred to another, just created.
  • Conversion. The company is changing its organizational and legal policy; fundamental changes are taking place in its management. In this case, a new company appears and is registered.

In all cases of restructuring, rights and obligations are transferred to another, established legal entity.

Restructuring a company is an opportunity to make changes to the well-functioning mechanism of an enterprise that will increase the efficiency of your business, optimize the work of an enterprise or staff, and improve the company in general. Nevertheless, not all managers succeed in using this tool correctly and effectively.

"M16-Consulting" tells how the restructuring of enterprise management takes place, what types of restructuring are usually applied and what mistakes the management makes most often.

  • Objectives of the procedure
  • Prerequisites
  • How to achieve better results
  • Types of restructuring
  • Directions
    • Changing the scale or scope of business
    • Changing the internal structure of the company
    • Changing the composition and structure of owners and capital
  • Financial restructuring
  • Organizational restructuring
  • Risks and potential mistakes

Goals of restructuring

Let's start with what results can be achieved after the restructuring procedure:

  • Optimization of the company's economic and financial performance;
  • General restructuring of business processes aimed at increasing their efficiency;
  • Reducing the risks of bankruptcy and hostile takeover from outside;
  • Optimization of the use of available resources (material, human, intellectual, etc.) ;
  • Increasing income from the company's activities;
  • Identifying illiquid assets and getting rid of them;
  • Optimizing the tax burden;
  • Increasing the competitiveness of the final product in the market;
  • Expanding the existing market segment or conquering new sectors;
  • Increasing the price of the company's shares.

Conditions for starting the enterprise restructuring

The following factors are prerequisites that indicate the need for a company to revise its current operating mechanisms:

  • Crisis situation of the enterprise;
  • Decrease in income or other indicators of the enterprise in comparison with its previous working periods or similar results of competitors;
  • Deterioration efficiency of enterprise management, insufficient control of work activities;
  • The growth of existing debts, the lack of prospects for their repayment, the risk of bankruptcy;
  • The so-called "big business syndrome" - due to an increase in the scale of the enterprise control over its activities has weakened, which led to a decrease in productivity;
  • Existing prospects for entering new markets or the possibility of expanding the scope of the company;
  • The emergence of administrative barriers and problems.

Enterprise and corporate restructuring: how to achieve better results?

In other words, restructuring is resorted to when the previous order of work has ceased to function effectively, profits have decreased, and receivables and payables have appeared.

It happens that successful companies use this method. This happens when an organization plans to expand its field of activity or range of services and goods. The main goal of restructuring in this case is to improve competitiveness.

The restructuring process has several stages:

  • Purpose of restructuring. At this stage, goals are set, planning an order of actions and setting goals. Stakeholders decide what they want to see in the end result.
  • Diagnostics. The company's problems, strengths and weaknesses, the level of financial condition are disclosed. Prospects for further development are outlined.
  • Restructuring strategy and program. Taking into account the data obtained, a specific plan is being developed according to which the enterprise will develop. Several ways of further development are put forward.
  • Restructuring. According to the planned path, the restructuring process is carried out, all points of the worked out plan are implemented and in case of deviation, an adjustment is made.
  • Evaluation of results. At the final stage, the results are evaluated.

Restructuring Forms

  • operational form;
  • strategic form.

The operational form is to change the company's activities, the main goal of which is financial improvement. This happens in cases where the enterprise is in critical condition. The reorganization is carried out in a short time with planning of further actions to overcome the crisis. It is carried out at its own expense.

The strategic form of restructuring is aimed at improving the investment opportunities of the enterprise. It aims to attract external funding sources. The ultimate goal of such a reorganization of the enterprise: the growth of competitiveness, market value.

Types of restructuring

  • Merge. This form of restructuring implies the merger of enterprises, while the previously existing organizations are liquidated, and a new legal entity is formed.
  • Attach. The rights and obligations of one legal entity are transferred to another, which continues to operate.
  • Separation. One enterprise is split into several organizations, while all rights are distributed among them.
  • Selection. Part of the rights of one organization is transferred to another, just created.
  • Conversion. The company is changing its organizational and legal policy; fundamental changes are taking place in its management. In this case, a new company appears and is registered.

In addition, comparative calculations of economic efficiency and risk assessment of various methods of attracting external capital are carried out. At this stage of work, it is also possible to conduct a market assessment of the value of an enterprise (business) or individual objects of its property (real estate, machinery, equipment, intellectual property). The results of the assessment will be the necessary basis for negotiations with potential lenders or investors.

Based on the results of this stage of work, an analytical report is drawn up with justification of the feasibility and potential possibility of attracting external financing for the needs of the enterprise, as well as with the results of calculations of borrowing efficiency.

Stage 8. Formalization of the main proposals based on the results of the previous stages of work in the form of a "restructuring business plan".

At this stage, the program and business plan are drawn up in the form of a single document, their final approval is carried out with the management of the enterprise and the schedule for the implementation of the program and the officials responsible for this are approved.

Based on the results of this stage of work, the finalized version of the enterprise restructuring program is being formed.

The final stage of this work is the processes of implementation of the approved restructuring program of the enterprise.

It should be noted that the program can include both all of the listed stages of work, and only a part of them, the most relevant (from the point of view of enterprise managers) for this particular enterprise.

Business restructuring plan

Materials justifying investments in restructuring projects are recommended to be prepared in the form of a business plan (business prospectus) accepted throughout the world, which should enable the investor to make a comprehensive assessment of the project and, first of all, show that the investment of the project profitable.

The following sections are the basis for drawing up a business plan:

The business plan is the basis for the restructuring project. It defines the goals and objectives that need to be solved in the process of restructuring, ways to achieve the set goals, the technical and economic indicators of the project, the assessment of the enterprise and its external environment.

Formation of a business plan makes it possible:

A brief excursion into restructuring terminology

Translated from English, "restructuring" is a restructuring of something. The Latin word structure (structura) means order, arrangement, structure. If we consider a company as a complex system, subject to the influence of factors of the external environment and internal environment, then the term "company restructuring" can be defined as follows:

Restructuring a company is a change in the structure of a company (in other words, the order, location of its elements), as well as the elements that form its business, under the influence of factors either from the external or internal environment (Figure 1). Restructuring includes: improvement of the management system, financial and economic policy of the company, its operating activities, marketing and sales system, personnel management.

The main reason why companies seek restructuring is usually the low efficiency of their activities, which is expressed in poor financial performance, a shortage of working capital, and a high level of accounts receivable and payable.

However, successful companies often undergo structural changes. After all, any modification of the scale of business or market conditions requires an adequate change in the management system and the implementation of restructuring programs.

What are the purposes of the restructuring? Traditionally, the owners and management of the company pursue two goals: increasing the company's competitiveness with a subsequent increase in its value. Depending on the goals and strategy of the company, one of the forms of restructuring is determined: operational or strategic.

Figure 1 Factors of the external and internal environment affecting the company's activities

Operational restructuring involves changing the structure of the company with the aim of its financial recovery (if the company is in a crisis state), or in order to improve its solvency. It is carried out at the expense of the company's internal sources with the help of tools for reducing and "straightening" (transition from indirect to direct costs) costs, separation and sale of non-core and auxiliary businesses. The result of an operational restructuring is getting a transparent and more manageable company, in which owners and managers can already understand which businesses should be developed and which ones to get rid of. Operational restructuring helps to improve the results of the enterprise in the short term and creates the preconditions for further, strategic restructuring.

Strategic restructuring is a process of structural changes aimed at increasing the investment attractiveness of a company, expanding its ability to attract external financing and increase value. The implementation of this type of restructuring is aimed at achieving long-term goals. The result of its successful implementation is an increased flow of the net present value of future income, an increase in the company's competitiveness and the market value of its equity capital. Conducting both operational and strategic restructuring can cover either all elements of a business system, or its individual components. Therefore, there is a classification of forms of restructuring according to the scale of coverage of structural changes. According to this criterion, complex and partial restructuring are distinguished.

Comprehensive restructuring is a long-term and expensive process, which is used by only a few enterprises. It is carried out in stages, transformations affect all elements of the company. Various mechanisms are used during this restructuring. At the same time, depending on the impact of targeted transformations on certain areas of the company's activities, the general restructuring program is being adjusted and further work continues.

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