Harvard in-text citation and Referencing used for this paper. Discuss the motives behind corporate restructuring and evaluate the methods by which mergers and takeovers may take place.
Whether the restructuring takes the form of splitting up a company, merging it with another company, reorganizing, or even taking on a new name, the goal is to end up with a more refined, more profitable entity. Both successful and failing companies may turn to restructuring to breathe fresh life and fresh profits into the business.
Companies facing bankruptcy will often reorganize in an attempt to regain their financial footing. This kind of reorganization may involve cutting the work force and eliminating money-losing divisions or products.
Companies that aren't ready for bankruptcy, but that are not growing at a rate that will keep them viable in the long term, may reorganize by negotiating a merger or refocusing their business on a new area or product.
Courts may require companies in bankruptcy to reorganize to pay off creditors and demonstrate their ability to turn a profit. Some companies reorganize in an attempt to stave off bankruptcy or large losses.
When one large company buys out another, it must reorganize to incorporate the new business assets and personnel. Some companies have a company culture of reinvention.
Stuart Gilson, author of "Creating Value Through Corporate Restructuring," cites Humana as one company that encouraged company leaders to always look for new ways of doing business.
Goals of Restructuring The ultimate objective of restructuring is to improve the company's financial picture. Stock prices and credit ratings should rise as a result of restructuring. In restructuring, businesses often grow leaner, cutting the work force and shedding less-profitable divisions or product lines.
Restructuring also allows companies with disparate business lines to split into two separate companies. Gilson gives the example of Humana, which in restructuring split up its insurance and hospital businesses.
Considerations One part of successful restructuring is convincing investors of the wisdom of the restructuring efforts, and selling them on the idea that this is a positive step for the company. Investors must have faith not only in the restructuring plan, but also in the executives' ability to carry out the plan.
Share prices will rise if investors see the company as viable and growing in the aftermath of restructuring.
References 2 BBC News:Corporate Restructuring is the corporate management term for the act of reorganizing the legal, ownership, What Are the Motives Behind Corporate Restructuring?
Like a person turning over a new leaf and making a fresh start, corporations try to gain a second wind by restructuring. Corporate Finance Solution. Harvard in-text citation and Referencing used for this paper.
Question. Part A: Discuss the motives behind corporate restructuring and evaluate the methods by which mergers and takeovers may take place. THE MOTIVES AND METHODS OF CORPORATE RESTRUCTURING * Authors.
G. Bennett Stewart III, Partners of Stern Stewart & Co., a corporate finance advisory firm specializing in corporate restructuring. Stern Stewart & Co. is also the publisher of this journal. Considerations. One part of successful restructuring is convincing investors of the wisdom of the restructuring efforts, and selling them on the idea that this is a positive step for the company.
Motives behind corporate restructuring 1. Motives behind expansion 2. Motives behind corporate control 3. Motives behind contraction 4.
Motives behind change in ownership structure 5. Motives behind expansion 1. Growth 2. Technology 3. Product advantage . "Motives Behind Corporate Restructuring" Essays and Research Papers Motives Behind Corporate Restructuring Categories of corporate restructuring Corporate Restructuring entails a range of activities including financial restructuring and organization restructuring.