Whilst corporate restructuring is sometimes seen as an indicator of financial difficulty or impending business failure, it is companies which undergo the process of restructuring that are most likely to continue to function efficiently and are able to maximise their profitability. Irregular cash flow, decline of sales or even a period of bad publicity can lead to a decrease business income and make it difficult for businesses to function effectively. This, in conjunction with the recent economic crisis, has led many companies to undertake corporate restructuring in order to secure their survival and increase their productivity.
When companies face financial difficulty failure to act quickly can limit the chances of recovery and lead to business closure and insolvency. Failure to manage financial troubles often causes stakeholders to become concerned and can result in a loss of investment, meaning the business then has less capital to finance the necessary restructuring to aid corporate turnaround. In order to maximise the effectiveness and success of corporate restructuring business must recognise and respond to potential issues quickly, preferably before they become a crisis. Swift action enables restructuring specialists to minimise business loss and increases the chance of business recovery.
Corporate restructuring often involves stabilising and containing the crisis in order to stop any further damage to the company. Once corporate restructuring experts have exercised the relevant damage limitation processes, they can offer advice and assistance to management teams in order to develop and implement an effective strategy to turn the business around. This is followed by a period of planned restructure during which the company may undergo significant change to its structure and processes in order to maximise the profits of the firm.
There are many options available for businesses undergoing corporate restructuring and many will depend on the industry or sector in which they operate. Specialists in restructuring are adept at presenting the options available to the business and analysing the impact and potential effects of changes to the company structure. Due to their experience, corporate restructuring consultants are able to provide forecasts which indicate how potential changes are likely to affect the business. This enables them to successfully build new business strategies or modify existing company strategies to reflect the changes to the business and its operational procedures.
Whilst many companies attempt to avoid corporate restructuring, it can be extremely beneficial to the business. In addition to ensuring the survival and avoiding the closure of struggling businesses, even businesses which are not facing current financial difficulties can benefit from undergoing a period of corporate restructuring. By engaging restructuring specialists, management teams can gain an insight into how their corporate structure is affecting operational stability and processes and what affect this is having on the business and profits. Restructuring can enable businesses to avoid financial difficulty as well as enabling business to recover from financial crisis. By continually assessing, undergoing corporate restructuring and ensuring the business model is appropriate, companies can effectively limit financial difficulties, increase revenue and productivity and maximise fiscal success regardless of temporary declines in trading or decreases in business income.
Baker Tilly is an independent firm of chartered accountants and business advisers, positioned as one of the leading mid-tier accountancy firms. One of Baker Tilly’s areas of expertise is in Corporate Restructuring and corporate turnaround solutions to corporate organisations. For more information, please visit: http://www.bakertilly.co.uk/services/recovery/corporate-restructuring.aspx