Meaning and Scope of restructuring

Meaning and Scope of restructuring

 

Restructuring in the corporate world means, reorganization of all the important structures of the company like legal, operational, ownership etc. This is done, to enhance the profits of the company and to organize it in a better way according to the present needs of the company.

Scope of Restructuring 

Portfolio and Asset Restructuring: This type of restructuring can be performed in the following ways:

• Merging two or more companies or entities.
• Purchasing assets of another firm.
• Acquisition of a part of an entity which leads to the change in ownership

Financial Engineering: This leads to changes in the existing capital structure

• Buying back of shares
• Issuing different types of shares like non-voting or preference shares
• Issuing different types of debts to meet the needs of fixed and working capital
• Infusing foreign debts and equities

Internal Streaming and Reorganizing the Business Process: This type of restructuring can be performed in the following manner

• Reducing the head count
• Closing uneconomical units
• Inducing programs to reduce costs
• Disposing off the assets which are not being used
• Reorganizing the business process

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