3 Levels of Restructuring a Company
Written by Michal Dallos
Restructuring

3 Levels of Restructuring a Company – which level are you facing?

You invested into a troubled company expecting a fast turnover of the situation. The due diligence has shown that the company’s financial structure may be troubled, and its operational processes problematic. So you make a plan for the financial and operational restructuring. Have you not forgotten anything?

3 levels

The company’s resuscitation: financial restructuring

No one has seen it coming and suddenly it hits: cash-down in the bank. While the management concentrates on the day-to-day business, small issues have been adding up and growing, the negative cash flow eats up liquidity, and the company suddenly collapses in insolvency. Just like the daily hamburger’s deposit on the cholesterol account leads to a heart attack, resuscitation needs to be provided fast.

The answer – financial restructuring – may turn to be painful: for excessive debt it may be the renegotiation of the creditors’ and vendors’ payment plans. In the next level, the sale of the sheet silver may be a useful step by limited asset liquidation or sale and lease-back. Another possible measure is the accounts receivable funded by a factoring company.

Company’s rehabilitation clinic: operational restructuring

Since you have resurrected the endangered corporate patient, you may want to send him to the rehabilitation clinic. Just like for people after a stroke, some daily routines need to be reestablished: operational restructuring with the aim of increasing efficiency and lowering the costs. The organizational processes shall be optimized, roles and responsibilities sharpened, and unnecessary overheads and voids removed from the corporate body. This takes long and may turn out to be even more painful than the financial restructuring; however, it’s the only chance to lower the long-term corporate cholesterol level.

Company’s psychotherapy: behavioral restructuring

The company has been financially and operationally restructured, and yet still not performing? You have to go deeper: the people are the key to all success! Their emotional stages, their positive or negative attitude, their belief in the meaningfulness of their own doing will determine the long-term outcome. Hence neither financial nor organizational transformation will substitute the transformation of the people involved. The key to the personal as well as team empowerment is building up trust through integrity and transparency by leaders of the restructuring.

[blockquote style=”1″]“No one can whistle a symphony. It takes an orchestra to play it.” – H.E. Luccock[/blockquote]

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