If a company is faced with financial strain from market forces, technological advancement or an unforeseen crisis, it may need to undergo a phase of restructuring and turnaround to ensure its future viability.

Restructuring is typically focused on a company’s balance sheet particularly the company’s debt position and equity capital. When restructuring, a company may seek to, among other things:

1. refinance or minimise its debts;
2. increase its credit facilities to allow greater access to working capital;
3. have its existing debts sold or transferred to more favourable parties;
4. convert its existing debt into equity; and
5. repurchase, consolidate or subdivide its issued shares.

Restructuring can focus on either the assets or liabilities of the company, or both. A change to one side will have a corresponding effect on the other.

Turnaround is typically focused on a company’s operation and management and its impact on profitability.

When a company is undergoing turnaround, the company will be seeking to:

1. cut costs and reduce expenses, this may involve considering current employment arrangements and contractual obligations (i.e. suppliers);
2. increase revenue, this may involve price rises or diversification of products or services; and
3. reduce unnecessary overheads and liabilities.