Corporate restructuring addresses an entity’s growing pains, and many businesses use it to improve the company’s productivity and finances. A company’s assets are scrutinized because the valuation factors into which restructuring strategy your business attorney suggests.
Restructuring is reorganizing, whether it is management to improve competitiveness or operations to improve your product and reduce costs. It may also be driven by outsized debt that needs to be addressed. Divisions or subsidiaries could be divested if they are underperforming, and debt might need to be restructured. It’s complicated. For a review of your circumstances, contact a San Antonio corporate restructuring lawyer at Begum Peláez-Prada PLLC.
External forces sometimes impact companies and their need to restructure. The 2008 financial crisis left GE Capital divesting itself of bloated loans by jettisoning GE Appliances, Water, and Plastics, as well as NBCUniversal after accepting a capital infusion from Warren Buffet. The streamlined company rallied after restructuring, which is beneficial as:
Many restructuring efforts involve business combinations, including mergers, acquisitions, and joint ventures that fuel synergy for participating companies—resulting in revenue growth and cost cuts. At Begum Peláez-Prada PLLC, we pride ourselves on arranging and managing these combinations to benefit our clients. Our lead attorney, Sasha Begum, is well-versed in international business and attendant legal issues. You are in competent hands when you choose us as your San Antonio corporate restructuring attorneys.
Companies embarking on restructuring can expect several advantages as a merger, acquisition, or joint venture candidate. Mergers increase each company’s market share, especially if the merger is horizontal, and reduce competition as former competitors forge ahead as one. Inorganic expansion through mergers and acquisitions happens much faster than expanding organically. When product output increases, the fixed costs to produce it are reduced.
Combined companies may also garner tax advantages according to the set-off and carry-forward provisions of the Income Tax Act of 1961. In 2016, the Insolvency and Bankruptcy Code relaxed some acquisition rules, making it easier to salvage an insolvent company.
Restructuring often occurs because a company is under financial duress. One strategy is to engage in a debt-equity swap, in which a creditor exchanges the debt for stock in the company. If a company is engaged in an acquisition, it can always borrow more money in a leveraged buyout to pay for it. Debt loading involves using cash flow to purchase and retire company founder shares.
Streamlining management and reallocating management duties can also factor into restructuring. Along with mergers and acquisitions, our San Antonio lawyers can manage reverse mergers so a small, private company can emerge as publicly traded, and any other restructuring strategies that strengthen your business.
Entrepreneurship is embedded in the American dream and free market capitalism. It’s who we are and what we value. And if you are experiencing the bumps and starts of growing your own business, you are not alone. There are solutions to fostering growth, and we can help implement them.
The attorneys at Begum Peláez-Prada PLLC have answers to your questions about stabilizing and nurturing your business. Restructuring can involve a business combination, divesture, swapping debt for equity, or revamping management. You won’t know what works for your business until you schedule your consultation with our San Antonio corporate restructuring lawyer.
