Corporate restructuring is a necessary element for most companies in the business industry. The entrepreneurs may implement these strategies to deal with general economic forces in the market, falling profits, alterations in the corporate strategies, changes in company ownership, or to manage the increasing cash flow. The main goal behind restructuring is to maximize the strengths of the company by eliminating inefficiency, reducing costs, and increasing profits.
No matter why you want to proceed ahead with restructuring, it requires exhaustive efforts to establish a strong valuation of component pieces and business enterprise. One should first have a clear understanding of the organization’s assets and may also need to evaluate different kinds of restructuring strategies to ensure desired results.
Some of the best corporate recovery and restructuring strategies that you can utilize for your business in Singapore:
- Mergers and acquisitions
When you consider a merger, a company is mainly absorbed and acquired into some other business entity. In some cases, the company may even combine with other existing organization and ultimately obtains a new status in the industry. This strategy is widely preferred by companies that are under financial distress and can help to achieve enhanced business synergy with the combination of the potential two businesses.
- Reverse merger
This strategy allows private companies to avail themselves of the opportunity to turn into public companies that are listed over the stock exchange, and that too without even requiring Initial Public Offer. When the reverse merger is applied, the private company purchases the major controlling share of another public company, and soon after that, they get control over the board of directors of that public company.
This strategy is also known as divestment and is basically the process of liquidation or sale of subsidiaries. Companies are allowed to sell assets, including intellectual property or subsidiaries, preferably by auction. They can also form a spin-off, issue an IPO, or create new business from the existing part of the organization. It is also permitted to sell a specific portion of the business to various shareholders.
- Joint venture
In the case of joint ventures, the involved companies create a new business entity. The idea is basically to involve individual companies in an agreement where they decide to contribute a range of available resources, the share of profits, expenses, and can have enhanced control over the newly formed joint venture.
- Strategic alliance
Here is another strategy for allowing two or multiple companies to collaborate in such a manner that they can achieve better business synergies. However, even after this alliance, they can perform operations as individual organizations.
Now you have gone through some of the best corporate restructuring and recovery strategies. It is first important to evaluate the current financial and operational conditions of your company and then make decisions about your preferred method of restructuring. One can hire the best restructuring firm in the area to lead the operations in a more secure and fruitful manner.