RESTRUCTURING

Do you know the restructuring process and how it works?
Here we explain it to you in more detail.


BUSINESS RESTRUCTURING

What exactly?

A corporate restructuring is a process in which a company is transformed into a new different business model than the one it previously owned, all with the aim of achieving higher levels of competitiveness in the market and, therefore, guaranteeing its survival and long-term stability.

As can be supposed, this process is not an easy and simple process, simply by being applied it is implied that the company is not in a good moment, and facing the changes that such a process entails is not something so easy and simple, therefore, the best thing a company facing this process can do is surround itself with a good expert team in restructuring who is capable of guiding the company in the different phases of the restructuring, but also, who knows how to advise you in debt negotiation with creditors.

In a restructuring, there are usually different actions that seek a greater efficiency in productivity Y lower operating costs, as well as, get rid of debt that hinders the development of the company and carry out a tax optimization, all with the aim of transforming a company with difficulties into a solvent, stable, profitable and competitive company.




When to apply this process in my company?



A restructuring must be carried out within the framework of a complicated situation for the company, generally when it has financial problems.


The problems can come from sources external either internal, being external due to changes in governmental, economic, sociological or competition issues, and internal when the company has not been able to adapt to customer demands, or its management or administration is not competent enough.




What are the symptoms of the need for restructuring?


If a company presents one or more of the following symptoms, it is very likely that it needs a restructuring that will help it to appease the crisis that it is suffering.

  • Capital structure in which there is excessive debt or little liquidity.
  • Negative changes in terms of earnings, profitability or income.
  • Less market share due to competition.
  • Recession or crisis of the market or sector in question.
  • Change in consumer preferences.
  • Insufficient internal communication or leadership.


  • The structure of the company does not match how the market to which it is dedicated is perceived.
  • High level of employee or customer turnover.
  • Operating costs too high.
  • Poor cash flow.
  • Low productivity compared to the competition.
  • Very high production costs.
  • Innovations that redefine the market.

THESE SECTIONS CAN BE LIKE FROM HERE UP OR IN ACCORDION AS BELOW

  • What exactly?

    A business restructuring is a process in which a company is transformed towards a new business model different from the one it previously had, all with the aim of achieving greater levels of competitiveness in the market and, therefore, guaranteeing its survival and stability. long-term.

  • When to apply a restructuring in my company?

    A restructuring must be carried out within the framework of a complicated situation for the company, generally when it has financial problems.

  • What are the symptoms of the need for restructuring?

    If a company presents one or more of the following symptoms, it is very likely that it needs a restructuring that will help it to appease the crisis that it is suffering.

What objectives does a restructuring have?


  • Separation of the company from investments not related to its activity

    It is essential that the company can get rid of businesses that do not have to do with its activity so that it does not have excess efforts in other areas that are not essential for its operation.

  • Unprofitable business discharge

    It supposes the elimination of investments that are not considered as profitable, that is to say, that suppose losses or too much productive effort for the own company.

  • Adoption of a new business model

    Said model would be established in the restructuring plan, which would include short- and long-term objectives, in addition to all the actions necessary to achieve them.

  • debt eradication

    It is one of the main objectives, since solvency is the most important thing when it comes to moving a company forward and we try to make its viability possible by eliminating existing debt and trying to avoid future debt, by optimizing processes.

Types of business restructuring


The restructuring procedures of a company or business can be diversified depending on the characteristics of its diagnosis and treatment.


technological restructuring

This type of restructuring supposes the incorporation and adaptation of a company to the new technologies, in addition, it can suppose an effort on the part of the employees, since, in most cases, they have to adapt to new technological methods.

INTERNAL BUSINESS RESTRUCTURING

This type of restructuring usually occurs when the elements of a company begin to fail or there is a bad financial situation in order to improve the internal efficiency of a company by optimizing its performance. To do this, they usually take into account the communication between the different departments of the company, the fulfillment of tasks by the employees or the production processes and their level of efficiency.

FINANCIAL RESTRUCTURING

This type of restructuring is usually the main one or the one that is most often applied, since it occurs in companies with financial difficulties, among which are the possession of a large debt, lack of liquidity, imbalances in the company's balance sheet, lack of of profitability in the business, fiscal difficulties, economic crises, etc.

When carrying out a financial restructuring, the assets of the company are usually taken into account, making it more profitable by reducing production or operating costs, or the liabilities by eliminating existing debt.


Stages of a business restructuring


Business restructuring is made up of 3 main stages or phases, but previously, it requires a phase in which the creation of a management team for said restructuring, which will have the duty to direct and supervise this process.


Diagnosis

The diagnosis phase is based on the identification of the weak aspects in a company in order to differentiate between what is really profitable and what is not, to visualize the level of losses and the different possibilities of survival, in a certain way, to regain control. company financial. This first step in a restructuring is divided into two phases:


  • Situation analysis

    It consists of detecting the problems that may have caused the bad situation of the company, but also, identifying the resources that are available at the time of beginning the treatment phase.

  • Making a plan

    In which the objectives to be met in the short or long term and the actions to be carried out to achieve them are taken into account.

treatmenteither

The second phase, the treatment phase, involves the application of the plan previously prepared in the previous restructuring phase (Diagnosis), which will allow the company to be able to protect itself from the current situation, but also in the long term from other problems that may emerge. For this, the involvement of each part of the company is needed, in order to reach a real change that allows us to save the company, changes such as the elimination of risks, a decrease in the market that the company covers and an increase in the productivity.

Recovery

Reaching this stage means achieving the objectives set out in the restructuring plan and is approaching a stage of stability, growth and profitability, therefore, the company can seek an expansion. For this, we will always take into account risk review, control and management mechanisms, which provide us with continuous diagnoses, thus seeking to prioritize the security of the company and its future evolution.

After the end of the 3 main stages of a corporate restructuring, there must be a continuous monitoring or evaluation phase, which will have the objective of identifying opportunities for improvement in the restructuring plan or changes in the structure of the company, always with the aim of ensuring the stability of business growth.

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