Corporate Restructuring

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Corporate Restructuring

Corporate restructuring is also referred to as business restructuring. Business restructuring is a process in which an entity changes its legal structure to ensure the seamless running of the business. This process is usually carried out when the business is facing financial or economic problems. When a company is unable to pay a corporate debt, it enters into a restructuring agreement with its lenders. In this agreement, the company's strategy to pay the corporate debt would be mentioned. Creditors and Lenders are an essential part of the corporate restructuring process.

A company's inability to not pay a corporate debt is not the only reason for corporate restructuring. Other reasons can be a company entering into an acquisition agreement, or a joint venture or M & A process.

Mergers

Mergers are understood as a combination of two or more corporate entities. The principal reason for a merger is to enjoy economies of scale and economies of scope. In this form of corporate restructuring, the companies or organizations enter into a merger agreement, where the terms and conditions of the merger are decided. There are lots of complex formalities in the merger process. Expert advice from a transaction specialist is required in this process. At ACAS, we have experienced M & A experts who can advise you throughout the process. A company merges with another company, just to improve its business.

Private Acquisitions

A private acquisition is a process when a company acquires another company. This process is also known as a takeover. A takeover process can be either a friendly takeover or a hostile takeover. In this transaction, there are three parties. The parties are the buyer, seller, and the target company. Private acquisitions normally occur due to increased benefits such as synergies, economies of scale, and economies of scope. The acquisition process is complex and requires expert advice. Our professionals at ACAS will ensure that you face seamless corporate restructuring services in an acquisition process. There are two forms of acquisitions:

Share

This is normally referred to as a share sale. In a share sale, the buyer acquires the entire share capital or a portion of the share capital of the seller or the target company. When a company is acquired as a result of a share sale, all assets and liabilities are transferred to the buyer.

Asset

This is usually referred to as an asset sale. In an asset sale, the buyer has the advantage of acquiring a specific asset. Hence through this process, the buyer can cherry-pick the assets of a company. One of the advantages of an asset sale is the buyer can leave the liabilities with the seller and only purchase the important assets of the target company.

Divestment

Divestment is a process in which a company sells off its subsidiary. Through the process of divestment, the company can reduce the number of debts. This type of strategic corporate restructuring is used in financial restructuring processes as well as debt restructuring processes. In the divestment process, the parent company will usually liquidate or wind up the subsidiary company's operations.

Demerger

This is a form of restructuring where the company divides into two separate groups. In this process, the synergies which are earlier enjoyed by the two entities are divided. A company demerges due to restructuring, reducing the financial burden, and other factors. Optimum capacity is reduced through the demerger's process, making the company produce the required amount of profits to run the business.

Reverse Merger

In a reverse merger, the private company gets different forms of benefits. A public company acquires a private company in a reverse merger. Due to this, the private company does not need to go through the entire process for applying its shares to be listed in a stock exchange. This form of corporate restructuring is to improve the private company's business without going through the entire process of applying for an initial public offering.

Strategic Partnership/Alliance

Strategic Partnership is also known as an alliance. In a strategic partnership, the companies partner to carry out business. However, a strategic partnership is effectuated through one or more contracts. The partnership is binding on the parties. However, a strategic partnership does not have the effect of a normal partnership or a registered company. A strategic partnership must be differentiated from a joint venture. In a joint venture, two or more companies agree to share profits for a particular period or until the project's execution. Once the period is over, the parties can resume carrying out their businesses.