The foundation of a successful corporate restructuring

David Filice • November 21, 2018

A corporate restructuring can be the most challenging task that a business may ever have to undertake. Restructurings are most often a means of avoiding dire straits, be it an immediate crisis or a set of potential problems looming on the horizon.

In this article, we will explore why a company may require corporate restructuring, and how it can actually benefit the business in the long run.

Why do Businesses Restructure in the First Place?

A question with both a short and a long answer. The short answer: Because there is no other choice –  not only due to the looming crisis that must be averted, but often at the request of creditors who have lost faith in a company and demand drastic changes if they are to continue to offer their support.

For the long answer, we have to consider the root cause that triggers a restructuring. There are a number of forces that can drive a Toronto business into requiring a corporate restructuring, the most common of which are:

  • Inefficiencies – Something within the organization is hindering your productivity. This could be in reference to your infrastructure, or outdated technology or equipment that causes the company to lose market share to other, more leading edge competitors.
  • Sea change – Changing market forces, technology trends, or simply a shift in the zeitgeist is threatening your profitability. In effect, the markets have shifted out of your favor, often through no fault of your own.
  • Philosophical failure – The business is faltering in its vision or is proceeding with no clear course. An inconsistent vision is often the result of continuous management changes constantly attempting to redefine it.

Rescue vs. Reinvigoration: The Critical Difference of Perspective

Corporate restructuring in Toronto generally carries with it a negative connotation and can often make people nervous. One might face a restructuring with panic and alarm bells, particularly if one has a significant stake in the company. Presenting your restructuring effort properly can make a world of difference with regard to public confidence in your business.

Some restructurings can easily be presented as a positive in the proper context—for example, if your business is restructuring to accommodate new technology, your company is ‘placing itself on the cutting edge’, or if your restructuring efforts are cutting loose obsolete products, your company is ‘focusing on what matters most’. However, it’s important to be open and honest when talking about the restructuring; nothing makes you lose credibility faster than being caught in a lie.

It’s not always possible to put a positive spin on a corporate restructuring, but carefully considering how it is approached can certainly soften the blow for nervous employees and stakeholders.

To learn more about how to present a corporate restructuring in Toronto, be sure to keep an eye on our blog and social media channels for a more in-depth overview, coming soon.

How to Rediscover Your Purpose Through Restructuring

Restructuring doesn’t necessarily need to be a negative experience for your business. A restructuring is an excellent opportunity to make major changes to how you approach your corporate philosophy. Even if the primary focus is more related to upgrading the infrastructure or technology, a corporate restructuring can offer an opportunity to identify areas where your business is falling short of its mission and modify accordingly.

A common cause is discordant divisions that are not relevant to the core business, or do not operate towards the same goals. Often a business will separate these incompatible divisions into their own entities, where they can be operated according to their own doctrines, without interfering with, or undermining, those of your core company.

Facing a Corporate Restructuring in Toronto?

Make sure that your corporate restructuring is set up for the best chance of success. Contact us today for a complimentary consultation.


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