There are times when a particular company underperforms and is desperately looking for market opportunities to restructure and recover. To begin with, and to prove the point, it is extremely important to find a strong management team that is focussed to turn the poorly performing businesses around by restructuring shareholder value.
Why does a business face critical hurdles?
There are several challenges that a small business face to recover. Among those, the management faces these three in any restructuring program:
- Design: The type of restructuring required to deal with the specific challenge, problem, or opportunity that the company faces.
- Execution: The exact process of restructuring required to manage and the barriers to overcome to come up with the biggest possible value.
- Marketing: The right process of market restructuring portrayed to investors so that the value created inside the company is credited to its stock price.
Top 5 ways of corporate restructuring:
- Joint ventures
Joint ventures are enterprises owned or formed by two or more participants for special purposes for a limited duration.
Why joint ventures are formed?
- To build on and support company’s strength
- To spread costs and risks
- To improving access to financial resources
- To access new technologies and customers
- To introduce innovative managerial practices
- Spinoffs in companies
One of the most effective ways to get rid of underperforming businesses that are dragging down profits.
Types of spinoffs:
- Split-off: A part of existing shareholders continue to receive stock in a subsidiary in exchange for parent company stock.
- Split-up: A transaction in which a company offshoots its subsidiaries to its shareholders and doesn’t exist any further.
- Divestures
Divesture is a transaction where a firm sells a portion of its assets or a division to another company in exchange of cash or securities to a third party.
Motives of divestures:
- To shift focus or corporate strategy
- To pay off leveraged finance
- Trust issues
- Urgent need of cash
- Defend against takeover
- Equity carve-out
It is a transaction where a parent firm offers some subsidiary shares are sold off to the general public, bringing in cash to the parent firm without losing out control.
- Leveraged buyout
This is a transaction where a person, group of people, or organization buys a company. Leveraged buyout also includes controlling share in the stock of a company.
These 5 methods of corporate restructuring can benefit your company if you are facing big hurdles. In case you are looking for expert advice, you may get in touch with White Knight Holdings. They are available on call at (888)930-1441. Visit their website http://whiteknightholdings.com/ to know more about restructuring shareholder value for your company.
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