“Restructuring” refers to when a company or business makes significant changes to its financial or operational structure. Many people assume that companies often restructure because of some misfortune (like bankruptcy) or a type of material disadvantage in the market. But the reality is that there are numerous reasons for making changes to a company’s structure, and restructuring might just be in your best interests.
What are the Reasons for Restructuring?
In general, companies restructure because of a need to change their organizational structure or business model. Another big picture need for corporate change is to make financial adjustments to a business’s assets and liabilities. With that said, there are several more specific reasons that may drive the desire to restructure. These include a company wanting to:
- Reduce costs,
- Incorporate new technology,
- Make better use of new or existing talent,
- Concentrate on certain products or accounts,
- Merge with another company,
- Spin off a subsidiary company, and
- Improve competitive advantage.
What are the Benefits of Restructuring?
Corporate restructuring can provide several real-time benefits for you and your business. Examples include:
- Financial gains,
- Increasing a company’s value,
- Preparing a business for sale,
- Increased efficiency,
- Gaining a competitive edge or advantage, and
- Expanding operations into new geographical areas.
Granted, restructuring helps some companies simply survive. But the process can help many other businesses truly succeed.
What is the Restructuring Process?
There are usually six stages associated with a restructure. These are:
- Deciding on what areas of a particular business need restructuring,
- Recognizing current weaknesses in an existing business model and developing plans to correct those weaknesses,
- Identifying a new structure to ensure any weaknesses are rectified,
- Securing funding,
- Restructuring, and
- Evaluating the impact of the restructure.
Please note that planning plays an integral role in the restructuring process. Before you decide to make changes to your company’s structure, it is critical to speak with a corporate attorney for help.
Contact The McWilliams Law Group for Help
If you are contemplating changing your company’s model, or if you’re ready to take your current business to the next level, the lawyers at The McWilliams Law Group are here to help. We can help ensure that your operations provide you with the tax and liability protections that best fit your short- and long-term plans. Our attorneys work closely with business owners throughout Washington and California, providing individualized and strategic advice to help their businesses run smoothly. Contact us now and get the skilled business advice that you deserve.