Corporate restructuring is one of the means employed by the company to achieve strategic and financial synergies. It is a process undertaken by corporates for arranging the business for increased efficiency and profitabi

Scope of Corporate Restructuring The scope of Corporate Restructuring encompasses enhancing economy (cost reduction) and improving efficiency (profitability). When a company wants to grow or survive in a competitive environment, it needs to restructure itself and focus on its competitive advantage. A larger company, resulting from merger of smaller ones, can achieve economies of scale. If the size is bigger, it enjoys a higher corporate status. The status allows it to leverage the same to its own advantage by enabling it to raise larger funds at lower costs. The reduction in the cost of capital translates into profits. Portfolio and Asset Restructuring This type of restructuring can be performed in the following ways: Purchasing assets of another company Acquisition of equity shares of another firm resulting in change of ownership Financial re-engineering Buying-back of shares Issuing different types of shares like non-voting or differential voting rights or preference shares Issuing different types of debts to meet the need for fixed and working capital Infusing foreign debts and equity Internal streaming and reorganizing the business process: Reducing the head count Closing uneconomical units Inducting programme to reduce costs: Disposing off obsolete and un-workable/idle assets Reorganizing the business process and techniques Different modes of Corporate Restructuring are as under: Merger Demerger Reverse Merger Disinvestment Takeovers Joint Venture Strategic alliance Franchising Slump Sale