The oxford dictionary (2007) defines restructuring as giving a new structure , to rebuild/rearrange. One can say that corporate restructuring is a structured decision making exercise undertaken to evaluate the current endowments of a co. by fine tuning the available skills, machinery ,& technology to meet the challenges of tomorrow. Corporate restructuring refers to the changes in ownership, business mix, assets mix and alliances with a view to enhance the shareholder value. Hence, corporate restructuring may involve ownership restructuring, business restructuring and assets restructuring. It generally involves selling of portion of the company & making drastic staff reduction .restructuring is often undertaken as part of a takeover by another firm. Restructuring is a corporate management term that stands for the act of partial dismantling or otherwise reorganizing a company to make it more efficient and therefore more profitable.
Definition:
Corporate restructuring can be defined as
any change in business capacity or portfolio that is
carried out by an inorganic route. any change in the capital structure of the company that is not in the ordinary course of business. any change of ownership of a company or control over its management or a combination of any two or all of the above.
Needs of Corporate Restructuring:
For higher earnings.
To expand the business or operations of the company. To carry on the business of the company more economically or more efficiently. To focus on its core strength.
Cost Reduction, by deriving the benefits of economies of scale.
To have access to better technology. To improve the debt-equity ratio. To have a better market share. To overcome significant problems in a company. To obtain tax advantages by merging a loss-making company with a profit-making company. To become globally competitive. To eliminate competition between the companies. To ensure clearing in vision ,strategy and structure.