India Entry & Business Startup Consultings

Business Restructuring

Business Restructuring

BUSINESS RESTRUCTURING SERVICES

Business is a risk-taking task occurred with uncertainty in regards to the firm’s operation because the journey is not predictable. It is a systematic risk where there are volatility and instability with the earnings, reduced liquidity, changing global markets that hinder the company’s objectives and growth.

Business Restructuring refers to the rearrangement of the corporate structure. It is a process whereby a company alters its present structure instead of its existing structure which involves a change in liability or asset structure. Business Structuring has immense significance in today’s world considering the huge emphasis on liberalization and globalization while ensuring free and extensive competition amongst businesses. Business restructuring helps businesses to survive and grow in the existing market with both internal and external growth.

The contemporary method of managing loans under stress is to apply for short term measures instead of trying to formulate a one-stop-solution on recovery or revival. This requires long term debt restructuring, management change, hassle-free liquidation, equity infusion, and recovery process in place. With the introduction of the insolvency and the bankruptcy code 2016, the Government has paved the way to a quicker and rational method of settling this NPA issue.

ASC broad-spectrum of services on Business restructuring

Our insolvency professional at ASC provides advisory and consulting service for all stakeholders in restructuring and insolvency cases. We understand the legal and political landscapes involved when a company gets into financial crises and economic downturn, thus offer one-stop-solutions. At ASCGroup, we minimize this impact and ensure that your business is not drastically affected by any untoward situation. From understanding the urgent needs of your business to anticipating any potential risks, the experts will help you comprehensively. Some broad services are specified below

  • Restructuring & turnaround Services.
  • Insolvency Resolution Professionals.
  • Winding up and closure of the business.
  • Planning and advising on mergers, Demergers, Takeovers, and acquisitions.
  • Legal Advisory (Drafting of Commercial Agreements, Joint venture Agreements, Drafting and Vetting of MOA & AOA.).
  • Financial Re-engineering & business valuation.

TYPES OF CORPORATE RESTRUCTURING

  1. Merger / Amalgamation: Laws in India use the term ‘amalgamation’ for the merger. In general terms, the merger is a combination of two or more companies into one, usually by offering the stockholders of one company securities acquiring the company in exchange for the surrender of their stocks. Amalgamation is the merger of one or more business with another to form a new company. ASC Group understands the needs, analysis the compliances in an effective manner to provide comprehensive advisory to resolve complex matters involved in the company.
    1. Merger through Consolidation: A consolidation merger is a combination of two or more companies forming into a ‘new company’. Here all companies are officially dissolved and altogether a different entity is created whereby the acquired company handovers its shares, assets, and liabilities to the obtaining company.
    2. Merger through Absorption: An absorption merger is a combination of two or more companies into an already ‘existing company’.
  2. Demerger: Demerger is a method of corporate restructuring whereby an entity’s business operations are divided into one or more components. Demerger can be of three forms such as split-up, spin-off, split-off.
  3. Acquisitions and Takeovers: It is defined as an act of acquiring effective control by one company over management or assets of another company. Thus, in an acquisition two or more companies may stay separate, independent legal entities, however, change in control of the companies can be there. When an acquisition is ‘unwilling’ or ‘forced’, it is termed as a takeover.
  4. Joint Venture: It is business preparation where more than two organizations share the ownership, governance, expense, return of investments, profit, etc. Joint Venture also refers to an arrangement where companies contribute to the equity capital of a new company in pre-decided proportion.
  5. Divestiture: In short, divestiture refers to the sale of assets, however not in a fragmentary manner. Divestiture is used to organize resources for core business by comprehending the value of non-core business assets.
  6. Buyback of Securities: When a business is holding surplus cash that is not necessitated in the medium term; it is judicious for the organization to return this extra cash to its shareholders. Buy-back of securities is one of the approaches used to return the extra cash to its shareholders.
  7. Reduction of Capital: It is a process whereby a company is allowed to reduce liability or extinguish on any of its shares if the share capital is allowed to cancel or not paid up.

ADVANTAGES OF BUSINESS RESTRUCTURING

  1. Strategic Benefit
  2. Managerial Effectiveness
  3. Utilization of excess capacities
  4. Enhance shareholders confidence in the company
  5. Complimentary Resources
  6. Economies of Scope
  7. Utilization of Surplus Funds
  8. Economies of Scale
  9. Economies of Vertical Integration
  10. Tax Shields
  11. Reduce the cost of operations
  12. Make the company more competitive to excel in the market
  13. Reduction of the interest burden
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