Restructuring Should be Strategic

Restructuring Should be Strategic

Many businesses look for short cuts when it comes to restructuring. Nevertheless, restructuring should be strategic where businesses can set strategic goals and avoid any long term losses. No matter how big the issues arise during the crisis, such as the coronavirus pandemic, businesses should take time to plan strategic long-term restructuring that will bring benefits. Restructuring experts are finding themselves in demand, anticipating that companies will not be able to make good on their promises on time.

As organisations have become more sophisticated, agile, and responsive to market needs, business restructures should now aim far beyond simple capacity and headcount reduction. The main goal should be to improve long-term health and capacity. Having the right business strategy is one of the keys to success.

Moreover, restructuring is more likely to be successful when managers first understand the fundamental business/strategic problem or opportunity that their company faces. An example of Chase Manhattan Bank and Chemical Bank is when they used their merger as an opportunity to both reduce operating costs and achieve an important strategic objective. 

Combining the two banks created opportunities to eliminate overlaps in such areas as back-office staff, branch offices, and computing infrastructure. Management of both banks also believed that larger and more diversified financial institutions would increasingly have a comparative advantage in attracting new business from corporate and retail customers. The merger was therefore also viewed as a vehicle for increasing top-line revenue growth. Internal cost-cutting alone would not have enabled either bank to achieve this second goal.

Moving forward, COVID-19 related uncertainty is triggering a vast array of business restructuring activities. Companies that are facing fast changes and crises, tend to react poorly or irrationally due to the pressure. For example, removing a company’s product development team may improve short-term profit, but badly damage future sales. Businesses should think long term, and act on critical areas of their business, without removing supporting sectors.

Restructuring Impact on People

Management must know what it is trying to achieve and what it wants the company to look like following the business restructure. People need to know it’s not their fault and there’s a bigger picture they couldn’t change. Employers should provide help and support for those leaving the company. Such support can range from offering services, such as career coaching and mentoring, to helping them network and find new jobs.

Meanwhile, for those employers that find themselves in the position of having to change the composition of their workforce as they reorient the business to exploit new opportunities, there is a talent management secret: upskilling or reskilling the workforce. One US bank, upon shutting down 80 per cent of its branches as a result of the pandemic, used an AI system to analyse the skills and experience of the 35,000 staff affected. The aim, according to Bersin, was to understand who would be the fastest and easiest to retrain for call centre positions and who should be placed on leave.

Successful business restructures tend to feature much wider strategic goals that position them for future growth. Heading the restructuring path, employees should have more compassion and provide help to people leaving the company.

To sum up, one thing has come to light, a need for change. Businesses are becoming aware of technological and digital transformation needed to accelerate their business through online apps or retail shops. Therefore, the goal of many restructures is to ready businesses to bounce back in an economic recovery. Achieving strategic goals requires continuous improvement. Once you think you have finished, start again.

Restructuring in e-commerce

Restructuring in e-commerce

According to the TMA Global, restructuring in e-commerce has raised some serious numbers. On the heels of 5,864 retail store closures in 2018, at least 8,558 additional stores will close in 2019. That number could climb as high as 12,000 in the years to come.

For instance, the media continues to describe restructuring as a “retail apocalypse”. Therefore, restructuring is more important now than ever. In addition, the U.S. still has much more retail square footage per capita than any other country in the world.

The rise of e-commerce and growth of online retailers like Amazon have forced an inevitable rationalization of brick-and-mortar retailers. Jon Graub of A&G Realty Partners says identifying the strengths and weaknesses of a retailer’s real estate portfolio is crucial. In other words, it is highly important to include all facts in the planning process before commencing a restructuring. He describes the data analytics revolution. In his analysis, he provides real estate advisors tools to identify which assets should be retained or sold.

E-commerce in Retail

For a long time, many saw the future of retail as a battle between online and brick-and-mortar sales. That fact raises the question of how will that reflect the way people shop? A consumer might start their search online to compare prices, and then check the item in person before purchasing. In other words, people will shop using both online search and by visiting the store. Therefore, this will not reflect on the way people shop.

That’s why a multichannel approach is becoming a key strategy for retailers.

TMA Global

By offering customers the option to browse online and buy in-store, retailers have an advantage over businesses. These advantages are only online or brick-and-mortar stores.

Technology continues to change the rules of engagement and consumers are more demanding. Besides, a real challenge is getting consumers to notice your brand amid all the noise in the market.

E-commerce has made more brands and more products accessible to more people than ever before. In other words, restructuring is becoming important now more than ever for retail business.

If everyone can get everything, it’s only natural that some people will seek out unique products, places, and experiences. Paying less for more and bragging about it has become a trend in itself.

Modern shoppers don’t want to pay full price and they aren’t afraid to share their opinions through reviews.

Consumers are educated on pricing strategies and are now prioritizing value. With more options and information at their disposal, consumers prefer to do their own product research.

Besides, consumer values now encompass a variety of attributes. The introduction of smartphones, which coincided with a global financial crisis, enabled consumers to become more price-savvy and informed.

Key takeaways for Restructuring e-commerce

Sustainability is no longer optional in retail. Moreover, green generation is making sustainable shopping a priority. That being said, more consumers now choose to buy brands based on their social and environmental impact.

Consumers are shopping with their emotions and values. Therefore they do care. Some companies have tried to appear socially responsible through clever marketing campaigns without building the cause into the soul of their business.

Today’s discerning consumer can see through clever tactics and demand more. Nowadays, retailers cannot just say they have a goal, they need to show the consumer that they are acting upon it.

Retailers are moving away from ad hoc sustainability marketing campaigns and abandoning minor themes that are not essential to the business.

In 2020 we will see companies make more meaningful sustainability commitments. Businesses have a significant impact that aligns with the values of the company, its brands and its target audiences.

Moreover, technology continues to change the habits of engagement and customers are becoming more demanding.

Getting them to notice your brand amid all the noise in the market is an even greater challenge.

One out of three Millennials uses social media as their primary tool to interact with brands and companies. Therefore, restructuring in retail business amongst other industries has become an essential part of the business. Financial restructuring guide can help you to evaluate your business needs and how to implement the financial restructuring.

Financial Restructuring Guide: How to implement Financial Restructuring?

Financial Restructuring Guide: How to implement Financial Restructuring?

Financial Restructuring has a meaningful role in business processes and structuring. Moreover, turnaround, the process of identifying and setting operational issues back on track to return a company to sound profitability.

That presents massive financial, operational, and emotional challenges to those directly involved in the process. However, most firms that have struggled through such difficulties reflect that it’s never too early to start the turnaround process.

According to TMA Global restructuring can be fraught, frightening, or, plainly and simply, a grind. Committee can usually have an impact on decision making within the organizations.

However, organizations move even further toward group-think. That also ensures that there are always reasons not to do something meaningful or not to be open for new decision planning.

Financial restructuring is required when a company’s performance is unable to keep pace with its financial obligations to creditors and other stakeholders.

It will often be the chance to alleviate distress and provide a platform for a turnaround in the company’s prospects. Failure to undertake financial restructuring can, unfortunately, often lead to a company having the one option to enter insolvency. The first signs of a need for financial restructuring include also understanding the promise or payment obligations.

Steps to take in Financial Restructuring

The first step for a company facing a financial restructuring is to make a quick, but thorough assessment of short-term (typically, 13-week) cash requirements.

It is necessary to assure that the business will reach its critical competencies while stakeholders assess and support the state. If there is a risk of a shortfall, this should be corrected.

Besides, all relevant stakeholders need to be immediately identified and mapped into various groups which is not always a simple task. The key objective at this point is that everyone comes to the table, recognizes the urgency and agrees on next steps.

Moreover, creating consensus can provide an opportunity to protect value and avoid possible insolvency for the company.

The first step in stabilization is a rapid yet detailed assessment of funding levels. The next step in the stabilization process for a company is to develop a stable platform to asses options. Also, it is crucial to review short-term cash flow to see how well management controls and monitors the cash.

Vital to a well-managed financial restructuring is the ability to secure stakeholders’ support for risk management during the initial assessment.

Moreover, Stakeholders need to challenge assumptions from borrowers and lenders. That includes understanding the reasons for underperformance, which might involve the management team, strategies, initiatives and the company’s business plan.

Developing a plan for Financial Restructuring

A company must assess the current management roles within the company. Also, the company needs to asses whether those are appropriate for the circumstances and overall goals of the business. Working together, stakeholders should establish a preferred outcome jointly with tolerable compromises and an effective method to determine strategy.

It is also essential to develop more than one plan to address possible contingencies. The first phases of appraisal, assessment and negotiation should lay a foundation for the development of the new capital structure.

To help ensure an efficient process and preserve value, the company should implement a deal in order. At the same time, new developments and demands from stakeholders might necessitate a reworking of the plan or even a return to developing options. Besides, for either borrowers or lenders, there is no valid assumption that the crisis passed.

Another important issue involves tax efficiency. In many cases, the original debt arrangements designed to mitigate tax liabilities were satisfied. However, restructuring can significantly change a company’s tax position. Since the implementation of the deal is underway, the restructuring must not unintentionally result in higher tax payments.

At this point, stakeholders reach a certain level of confidence that the worst days have passed. Also, management is focusing on catching advantage of new opportunities through restructuring. Lenders should be satisfied that the value stayed preserved as much as possible.


However, financial restructuring is a dynamic process, and new developments can change circumstances for everyone. For example, existing dept could take place in secondary markets, while new debt owners could be satisfied with the deal. The company may not perform according to plan, therefore, new possibilities could take place.

Planning realistic and tangible steps for the turnaround project, setting aside time to evaluate the impact, and then being open to creative, perhaps unprecedented, ideas are also necessary for measuring success. Also, continual analysis during implementation will determine if the company sits in the bottom of a financial or operational cycle or can begin the climb upward.

Moreover, attention to performance metrics, analysis, and action is a necessary step in financial restructuring. The goal is corporate renewal through long-lasting, impactful change.

Therefore, regular analysis through implementation determines if the company lies in the bottom of a financial or operational cycle. Thus, the company can begin the climb upward. You can learn more about financial restructuring in terms of analysis in the DCF model.

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