A BEECHMONT CREST ONLINE GUIDE
MERGERS & ACQUISITIONS
What is Corporate Restructuring?
Corporate restructuring is a broad term that includes divestitures, financial restructuring, and downsizing.
The motives for corporate restructuring may be:
financial difficulties
poor performance of one of the company’s assets
a shift in the overall strategic orientation of the company.
-A divestiture occurs when a company sells off assets. Usually the divestiture involves an unprofitable division, or a nonperforming business entity that the company had previously acquired.
-Financial restructuring is a change in the company’s capital structure. This might include the assumption of additional debt.
-Corporate downsizing involves workforce reduction. Downsizing is common during recessions and economic downturns.
Corporate restructuring in the news:
In 2006, troubled automaker Ford Motor Company engaged in extensive corporate restructuring. The company eliminated tens of thousands of production and management workers, and implemented an $18 billion financing plan to increase its liquidity.