Administration. c) Conglomerate Merger- Conglomerate merger is a process in which companies in different business merge. Due to this code, the number of bad debts has drastically reduced. A sole proprietor business can also be restructured or acquired by another company. Corporate Restructuring occurs when a company wants to restructure its debts and finances. The importance of Synergy 5. The above statement is true in every sense. Strategic Alliance 10. In merger, two companies consolidate into a single entity with a new ownership and management structure. In this process, the synergies which are earlier enjoyed by the two entities are divided. Tata Steel Ltd. acquired overseas Corus Group Plc. Synergies can be expected to flow from highly focused operational efforts, rationalization and simplification of processes, rise in productivity, better procurements, and eliminate duplication. Reasons for Corporate Restructuring Change in the Strategy Lack of Profits Reverse Synergy Cash Flow Requirement Types of Corporate Restructuring Financial Restructuring Organizational Restructuring Debt Restructuring Corporate Restructuring Strategies Mergers and Acquisitions Amalgamation Demerger Reverse Merger Takeover Corporate Takeovers This is done to support the market and for the benefit of the organization. width: 100%; Divestment is a process in which a company sells off its subsidiary. (9) Slump Sale. When a company is unable to pay a corporate debt, it enters into a restructuring agreement with its lenders. In an asset sale, the buyer has the advantage of acquiring a specific asset. Corporate Restructuring occurs when a company wants to restructure its debts and finances. 10. (5) Takeovers (4) Economies of scale Mergers result in enhanced economies of scale, due to which there is reduction in cost per unit. 5. Overview of Corporate Restructuring Industry in India In a joint venture, two or more companies agree to share profits for a particular period or until the project's execution. The various needs for undertaking a Corporate Restructuring exercise are as follows . Introduction 2. The parties are the buyer, seller, and the target company. Prescribes Procedure for Import/Export/Procurement/Supply of Ship to DTA by an IFSC Unit, Global challenges prompting for Corporate, Inorganic Growth in lieu of Organic Growth, Differences between Merger and Acquisition, Instances of beneficial corporate restructuring, Merger occurs when two separate entities, come together to create a new, joint organization in which both are partners, Acquisition refers to the purchase of one entity by another entity, One or more companies are dissolved and new company maybe created, No company is dissolved and no new company is created, i.e. (7) Strategic alliance This sort of rebuilding is done to cut down the expenses and to satisfy remarkable obligations so that business tasks may proceed in some way without any hindrance. border-radius: 8px; The partnership is binding on the parties. Reasons for Corporate Restructuring Corporate restructuring is implemented in the following situations: Change in the Strategy: The management of the distressed entity attempts to improve its performance by eliminating certain divisions and subsidiaries which do not align with the core strategy of the company. I highly recommend this company., Excellent advisory role by Enterslice Team. However, a strategic partnership does not have the effect of a normal partnership or a registered company. This process is usually carried out when the business is facing financial or economic problems. font-size: 16px; ReasonsforCorporateRestructuring ChangeintheStrategy: Theadministrationofthetroubledelementendeavourstoimproveitsexhibitionbydisposingofitsspecificdivisionsandorganization. How long does the restructuring process take? In this article we are going to discuss about meaning of corporate restructuring, Concept and importance of corporate Restructuring and we will be also talking about its types in detail. The following steps have to be followed in a restructuring process: and we will be also talking about its types in detail. Enterslice is a recognized management consultant in providing restructuring services. Download Black by ClearTax App to file returns from your mobile phone. Business restructuring is a process in which an entity changes its legal structure to ensure the seamless running of the business. Renegotiating labour contracts to reduce overhead. Strategic Alliance is an agreement between two or more parties to collaborate/cooperate with each other in order to achieve certain commercial objectives. The division or backups may not seem to fit deliberately with the organization's long haul vision. Personal insolvency is normally referred to as individual insolvency. The application was filed within 3 days. (a) focus on core competence, operational synergy, cost reduction and efficient allocation of managerial capabilities; (b) balance utilization of available infrastructure and resources; (c) economies of scale by expansion to exploit domestic and international markets; (d) revival and rehabilitation of a sick unit by adjusting losses of the sick unit with profits of a healthy company; (e) acquiring constant supply of raw materials and access to scientific research and technological developments; (f) capital restructuring by appropriate mix of loan and equity funds to reduce the cost of servicing and improve return on capital employed; (g) improve corporate performance to achieve competitive advantage by adopting the radical changes brought out by information technology. Your email address will not be published. Disposing of the underutilised assets, such as brands/patent rights. Other reasons for restructuring include a change of ownership or ownership structure, demerger, or a response to a crisis or major change in the business such as . To reduce the costs of the company. Hence a company utilizes different forms of restructuring strategies to ensure there is sufficient cash flow and does not lead to business disruption. Easy Payment Options Available No Spam. To improve the talent of the business. However, such dominance shall be subject to regulations of the Competition Act, 2002. Joint Ventures Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. We got TM Approved in 6 months time without any re-submission or objection. #CTAbody{ Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Authentic Databases, Books, Journals, Practice Modules, Exam Platforms, and More. Moving of tasks, for example, moving of assembling activities to bring down cost areas. Reliance Industries & Network TV18). What is the Importance of corporate restructuring, In this article we are going to discuss about, Concept and importance of corporate Restructuring. The following services are included in the corporate restructuring package: The restructuring process will depend on the type of transaction and the parties involved. Mergers and Acquisitions: Corporate restructuring during a merger or acquisition is a way to integrate operations, streamline processes, and make the transition smooth. Hence, restructuring services also covers the business of a sole proprietor. Global challenges prompting for Corporate It facilitates the smoothening of business cycles effect on the company due to multiplicity of businesses, thereby reducing risk. However, a strategic partnership is effectuated through one or more contracts. Corporate restructuring refers to reorganizing a company's operations, finances, and structure to improve its efficiency and competitiveness. The three broad reasons for restructuring a company are to cope with changed nature of businesses, streamline operations, and implement corporate governance decisions. Our professionals at Enterslice will ensure that you face seamless corporate restructuring services in an acquisition process. align-items: flex-start; However, as a guarantor for special purpose vehicles, Bharti Airtel assumes full responsibility. color: #9092A3; Strategic alliances allow organizations to pursue opportunities at a faster pace. font-weight: 700; A business restructuring process, such as a merger or acquisition, would take between 6 months to 2 years. Stay updated with all the latest legal updates. At Enterslice, we take pride in the work we offer. Home Blog Corporate Restructuring: Types and Importance, 1. Voluntary Winding Up. may happen because of a serious fall in the general deals in the light of unfavourable financial conditions. Mergers When it comes to debt restructuring, it hasn't performed according to the expectation of investors. 4. It is otherwise called Acquisition. Hence a company utilizes different forms of restructuring strategies to ensure there is sufficient cash flow and does not lead to business disruption. Tax assessment and Stamp obligation viewpoints. What is corporate insolvency? When a company is unable to pay a corporate debt, it enters into a restructuring agreement with its lenders. Notable mergers/demergers/acquisitions that took place are Myntra acquiring Jabong, RIL acquiring Network TV18, Sun Pharma absorbing Ranbaxy; Wirpo demerger, Reliance Industries demerger. Business restructuring can be understood as the change of strategies of the business. In this form of corporate restructuring, the companies or organizations enter into a merger agreement, where the terms and conditions of the merger are decided. 6. Using this strategy, the company can reduce its financial burden. A strategic partnership must be differentiated from a joint venture. Under this system, an element moves at least one endeavour for a single amount thought. Personal insolvency would come under corporate restructuring services as even the business of a sole proprietorship has status under the law. It never settles on one point and keeps on changing as time flies. d) Cash Merger- A cash merger is a process in which one of the companies acquires the other company for a specific amount of cash. Differences between Merger and Acquisition Track Progress When a corporate element sells out or exchanges a benefit or auxiliary, it is known as "divestiture". We help your organization identify the strengths and weaknesses. The concerned substance may choose that by stripping a division to an outsider it can bring more worth as opposed to owning it. Inorganic Growth in lieu of Organic Growth 7. Change in the Strategy. The primary purpose of restructuring is to arrange the structure of the company to produce optimum performance. Their support in building fintech software is amazing., I chose Enterslice to start my new Indian adventure as entrepreneur, and respect my past experience i was surprised by their professionalism. Globalization has improved the financial landscape in India. Share Directing an advertising effort everywhere to reposition the organization with its customers. Expert advice from a transaction specialist is required in this process. Corporate Restructuring focuses on cost reduction and improving efficiency and profitability. They understood our requirement and gave us exactly what we wanted. This wasn't possible before the introduction of the IBC. Characteristics of Corporate Restructuring. The team ensures that the following publication guidelines are thoroughly followed while developing the content: Your email address will not be published. I have recommended them to many of my acquaintance already., Great set of people working together. Debt Restructuring- Debt restructuring is usually used by a company to change its strategy to pay off a debt. (4) Disinvestment 3. Types of corporate restructuring Benefits 3. Corporate restructuring is also referred to as business restructuring. Experts at Enterslice have immense experience in handling restructuring processes for NBFCs and Fintech Companies. In acquisition, one company takes over all total operational management control of another company. Also Read: What Is Corporate Sustainability . Package inclusions: Advice on the procedure for the corporate restructuring process. Companies Act 2013 or Companies Act 1956- Section 233 (of the CA 2013) deals with the process in which companies can opt for a fast-track merger. In a joint venture, a new enterprise is formed with participation in ownership, control and management of two or more parties.