Considering corporate financial restructuring as a way to reduce your business liabilities and boost profitability?
Fortunately, the expert team of experienced business solicitors here at Wilson Browne Solicitors is on hand to provide professional advice.
We explain what’s involved in financial restructuring, when your business might need it, and why this process can make all the difference to the success of your company.
What is financial restructuring?
As the name suggests, financial restructuring refers to a process of making substantial changes to your company’s existing financial structure. Often, financial restructuring is implemented during a time of financial duress.
In these circumstances, business managers need to make difficult and crucial decisions – usually under significant pressure – to keep the business afloat.
Financial and non-financial reasons can give rise to corporate financial restructuring, but the most common reason for financial restructuring is when a business cannot pay its debts.
Why is financial restructuring important?
The ultimate aim is to prevent further financial loss by reducing costs, increasing profitability, and improving efficiency.
It can involve the valuation of firm assets and liabilities, negotiation with creditors to reduce debt, or even the introduction of new technologies to boost efficiency.
What is an example of financial restructuring?
Some of the most common examples of financial restructuring relate to cutting costs.
To significantly cut costs as part of its restructuring strategy, a business might choose to close unprofitable branches or embrace virtual meetings and cost-saving technology.
What are the steps of a financial restructure?
Unsure where to start when it comes to corporate financial restructuring? We explain the key steps of any financial restructure in more detail below.
Determine your restructuring goals
Attempting to reduce or eliminate your debts by saving costs? Or maybe you want to become more efficient by downsizing?
Before you can delve any further into the financial restructuring process, it pays to have a plan.
The first step to creating a successful corporate financial restructuring strategy is therefore deciding which objectives you want to achieve.
Analyse your financial situation
As one of the main reasons for financial restructuring typically involves cutting costs, it’s crucial that you assess all your financial assets and liabilities. From your overheads to your non-essential costs, carrying out this financial audit is the best starting point.
You may even want to hire an external accountant who can recommend financial and tax obligation improvements as well as tools that can improve efficiency and save you money.
Seek expert support
Financial restructuring often affects every aspect of a business, including the employees, stakeholders, and customers. The closing of branches to save costs, for example, can have a substantial impact on staff and your customers.
To limit the impact of any negative consequences of restructing, like redundancy for example, and ensure you’re acting within the confines of the law, it’s vital that you seek relevant professional legal support.
Decide upon a new structure
Naturally, once you’ve assessed your current financial situation and enlisted the right support, you can decide how your new financial structure should work. A business solicitor can play an instrumental role at this stage, explaining the various advantages and disadvantages of your proposed or desired new financial structure.
Continually assess the structure
After creating the new financial structure for your business, you’ll need to monitor the situation to ensure it’s creating the desired results. If it’s falling short of your expectations, then you’ll need to be prepared to change your approach until you begin to achieve your initial restructuring objectives.
Expert support with corporate financial restructuring
Businesses can decide to restructure for a wide range of reasons, but if you’re currently considering corporate financial restructuring, don’t hesitate to contact the award-winning team of corporate and commercial solicitors at Wilson Browne.
Regardless of whether you have legal, commercial, or practical concerns, we have accumulated years of invaluable experience helping companies in the manufacturing, engineering, logistics, and medical industry to successfully restructure their business.
By taking the time to truly understand the reasons for your restructure, we can provide you with clear and pragmatic legal advice to ensure you make the right decisions when it comes to restructuring your business.
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