Business restructuring is the discipline of applying financial or operational change in an organisation.
This may be undertaken for a number of reasons including:
- improving efficiency and financial performance
- accessing cost reduction and profitability benefits from combining businesses or business areas
- increasing levels of working capital.
Restructuring is also associated with businesses facing financial difficulties or which may be at risk of insolvency (being unable to pay its debts and entering administration) or liquidation (closing a company so that its assets can be sold to pay its debts) - this is known as corporate recovery. When a company is in administration, the objective of a corporate recovery professional is to achieve the best possible outcome for stakeholders, this is usually to return it to a stable financial situation and allow it to continue trading
Both corporate recovery and restructuring professionals are independent and will usually work for an external consultancy business or an accountancy firm which has a department dedicated to this field. A few examples include corporate recovery professional and a banking liquidity professional.