Restructuring & Turnaround Advice
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:
- refinance or minimise its debts;
- increase its credit facilities to allow greater access to working capital;
- have its existing debts sold or transferred to more favourable parties;
- convert its existing debt into equity; and
- 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:
- cut costs and reduce expenses, this may involve considering current employment arrangements and contractual obligations (i.e. suppliers);
- increase revenue, this may involve price rises or diversification of products or services; and
- reduce unnecessary overheads and liabilities.