What is a corporate restructuring process?

What is a corporate restructuring process?
Published on: 13 June 2023

Table of contents

A corporate restructuring process is a strategy used to improve the efficiency and effectiveness of a company. In general, restructuring involves significant changes to a company's structure, operations and strategies in order to improve performance, reduce costs, increase productivity, maximise profitability and ensure long-term sustainability. In general, a corporate restructuring process is a complex strategy that requires careful planning, clear communication and effective implementation that in many cases requires expertise.

A corporate restructuring process may involve changes in different areas of the company, including its organisational structure, its operational processes, its business model, its marketing strategy, its human resources policy and its financial structure. The specific changes made in a restructuring will depend on the needs and objectives of the company, as well as the specific challenges it faces.

In terms of operational processes, restructuring may involve implementing new technologies, automating processes, reducing costs and optimising processes to improve efficiency and product quality. It may also involve an overhaul of the supply chain to reduce costs and improve efficiency.

What should a corporate restructuring contain?

A corporate restructuring may have different objectives and, therefore, the elements to be included may vary depending on the specific needs of the company. However, the following are some general elements that are usually present in a corporate restructuring:

  1. Analysis of the current situation: It is important to conduct a detailed analysis of the company's current situation, identifying its strengths, weaknesses, opportunities and threats. This may include a review of financial statements, organisational structure, employee performance, competition, among other aspects.
  2. Defining objectives: Based on the analysis carried out, the objectives to be achieved by the restructuring should be defined. These objectives can be related to cost reduction, efficiency improvement, increased profitability, market expansion, among others.
  3. Designing a new organisational structure: In many cases, a restructuring involves changes in the organisational structure of the company, such as the elimination of areas or jobs, the creation of new areas, the reallocation of responsibilities, etc. It is important to define the new structure and ensure that it is consistent with the objectives of the restructuring.
  4. Identification of the necessary resources: It is necessary to identify the resources needed to implement the restructuring, such as investment in technology, training of employees, hiring of additional staff, etc.
  5. Communication with employees and other stakeholders: It is important to involve employees and other stakeholders in the restructuring process and to communicate clearly and transparently the objectives and changes to be made.
  6. Implementation plan: A detailed plan should be drawn up setting out the stages of implementation of the restructuring, who is responsible for each task, the timeframe, the resources required, among other aspects.
  7. Monitoring and evaluation: It is important to monitor the progress of the restructuring and evaluate whether the set objectives are being achieved. If not, adjustments should be made to the implementation plan to ensure that the desired results are achieved.

Types of restructuring

  1. Financial restructuring: This restructuring focuses on improving the company's financial situation, e.g. by reducing costs, renegotiating debts, selling non-core assets or obtaining additional financing. The objective is to improve the liquidity and solvency of the company.
  2. Organisational restructuring: Focuses on optimising the company's organisational structure to improve efficiency and productivity. This may include the reduction of non-essential areas, the reorganisation of areas or departments, the consolidation of similar areas, the redefinition of roles and responsibilities, among other changes.
  3. Strategic restructuring: This restructuring focuses on redesigning the company's business strategy to adapt to changes in the market, new opportunities or challenges, or to improve long-term profitability. This may include entering new markets, diversifying product or service offerings, or eliminating unprofitable areas.
  4. Personnel restructuring: Focuses on changes in the company's workforce, such as eliminating non-essential jobs, reducing labour costs, hiring key personnel, or training employees to acquire new skills. The aim is to improve the efficiency and productivity of the company.
  5. Technological restructuring: This restructuring focuses on modernising the company's infrastructure and technology, to improve efficiency and productivity, and to keep up with changes in the market and competition. This may include the implementation of new systems and technologies, the automation of processes, or the elimination of obsolete technologies.

When is corporate restructuring carried out?

Corporate restructuring may be necessary at different times and in different situations, depending on the specific needs and objectives of the company. Some of the most common times for corporate restructuring are as follows:

  • Financial crisis: When a company is facing financial problems, such as declining sales, loss of customers, or rising costs, it may be necessary to carry out a financial restructuring to improve the company's economic situation and ensure its long-term viability.
  • Market changes: When market changes occur, such as new consumer trends, technological innovations, or changes in competition, the company may need to strategically restructure to adapt to these changes and remain competitive.
  • Growth or expansion: When a company experiences rapid growth, organisational restructuring may be necessary to optimise its structure and processes and ensure its long-term sustainability.
  • Mergers and acquisitions: When two or more companies merge or one company acquires another, restructuring may be necessary to integrate the operations of both companies, optimise their structure, processes and personnel, and ensure a smooth transition.
  • Leadership change: When a company undergoes a change in leadership, such as the arrival of a new CEO, a restructuring may be necessary to implement the new leader's vision and strategy, and to optimise the company's structure and processes.
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