Corporate Restructuring/Insolvency

Corporate restructuring can be a complex, sensitive, and stressful process and must be undertaken with the utmost care. It often represents a major business investment, typically conducted when a company is already in financial distress.

So how can you ensure the best outcome for you and your stakeholders? We will review the four key components to a successful corporate restructuring:

1. Leadership and vision

Solid leadership is an absolute prerequisite to even considering a restructuring effort, for two reasons:

First, an effective leader with a clear, well-defined, and realistic vision will help to define the ultimate goal of the restructuring and keep it on track. This requires clarity and conviction to ensure that the restructuring both starts with and maintains its focus.

Second, an effective leader who possesses the respect and support of their peers and subordinates can ensure that the majority stakeholders (i.e. major lenders, major suppliers, customers, and employees) do not lose confidence through the restructuring process.

2. Timing

Identifying the need for restructuring before it is too late is extremely important. Often the timeframe between when problems are first identified and when they are beyond repair can be quite small. Unaddressed problems will continue to grow until the business no longer has the means to rectify them, at which point restructuring leads to sinking valuable remaining resources into a lost cause.

You will want to ensure that there is sufficient cash flow or financing in place to get through the entire corporate restructuring, which often takes considerably longer than one might anticipate. If your projections fall short, a vain attempt to save it anyways will often do little more than rob you of what value the business has left.

Timing can very easily be tied with leadership in its importance; a visionary leader will often be able to start planning early and pre-emptively restructure to avoid further issues.

3. Planning and execution

It’s important to fully consider all the details of your current situation and to determine precisely what sort of restructuring would be best suited to your unique circumstances.

There is no ‘one-size-fits-all’ solution. The precise challenges that a successful restructuring must address will vary greatly from client to client.

An advisory firm with an experienced Restructuring and Insolvency team can help you formulate a detailed plan, assist in negotiating with stakeholders, and oversee the execution of the restructuring.

4. Publicity

While some might think that publicity is something that ought to be a secondary concern, in reality, it is a vital component of the restructuring effort. Confidence in your business, your brand, your product, and your leadership is extremely important; even the most well-executed restructuring can be for naught if your business is hung out to dry in the court of public opinion.

How will your restructuring be announced or presented to your investors? Or to the world at large? Will they think that you’re grasping on to something obsolete? Or shifting to the cutting edge?

Again, the publicity challenges can vary greatly on a case-by-case basis, but the one constant is that handling it well can make massive strides towards building and restoring the confidence of your lenders, suppliers, investors, employees, and customers.

Don’t take chances when it comes to corporate restructuring.

Whether you’re helping a client through a business hardship or facing a corporate restructuring yourself, a successful restructuring should take into account the best interests of all stakeholders. Be sure to act on the advice of a reputable, experienced restructuring and insolvency team. Fuller Landau can help.

To learn more or to schedule a complimentary consultation, contact us today.