InBus_Win09_56-96:InBusiness 1-61 11/12/2009 10:45 Page 65
Financial Restructuring | SPECIAL REPORT
Taking
Stock
++++++++++++++++
Financial restructuring is a reality
facing many businesses now but it
doesn’t mean disaster. In fact, it can
breathe new life into your business,
writes Robert Hogan.
+++++++++
A BUSINESS CAN RUN INTO
financial difficulties in ways which
seem completely out of the blue. With
“BY RESTRUCTURING YOU
the day-to-day operations of the company the
primary concern, it is not too difficult to lose
MAY FIND THAT CERTAIN
track of what you could call the ‘little details’. downsizing and slashing jobs as a means to
DEPARTMENTS OF THE
Unfortunately, these little details can sometimes cutting costs. But I believe that reducing human
add up, then all of a sudden you are presented capital is not always the best option. These cuts
COMPANY PERFORM
with a business crisis and you don’t know where can yield unintended consequences over the
SIMILAR FUNCTIONS AND
it came from. When a situation such as this long term, and that trimming away expenses
develops, locating the exact cause can be an instead of hacking at them may be a faster way
IN SOME CASES ONE
arduous, time-consuming operation so it is to higher profits.”
MIGHT RENDER THE
crucial to address the issue head-on rather than In some cases, financial restructuring is a
hope it will fix itself. Tough decisions need to be strategy that must take place in order for a
OTHER OBSOLETE.”
made and they need to be made fast. Just company to continue operations or the process
– Tanguy Morel
about every business goes through a phase of takes place as a means of allocating resources to
financial restructuring at one time or another different ventures or projects. When this cash. Identifying these areas should be an easy
and it is becoming increasingly common in the happens, the restructure is often viewed as a task, but downsizing or eliminating them can be
current environment. A financial restructuring sign that the company is financially stable and quite difficult.
may include a review of the costs associated has set goals for future growth and expansion. A good restructuring plan should begin with
with each sector of the business and identify This is especially true when sales decline and an in-depth review of current business
ways to cut costs and increase the net profit. the corporation no longer generates a consistent operations and an understanding should be
The restructuring may also call for the reduction net profit. developed of what is driving costs, profits and
or suspension of production facilities that are cash flow. After conducting this review, you
obsolete or currently produce goods that are OPTIONS AND STRATEGY should consider the restructuring options
not selling well and are scheduled to be Cash flow and business viability are key and available, taking into account relevant
phased out. should be uppermost in your mind when commercial and legal constraints affecting
“Companies are truly feeling the impact of considering restructuring options and strategy. business operations and resources.
the recession with many finding cutting costs Falling turnover, pressure on margins and
and identifying substantial savings a key limited cash resources require a tightening of SIGNIFICANT SAVINGS
challenge for 2010,” says Tanguy Morel, belts and a speedy withdrawal from those According to Morel, telecommunications is a
Director with Leyton. “For decades, businesses business ventures with long term profit goals, or key area where a company can introduce
in financial trouble have first turned to those which are simply draining the business of significant savings. “Companies should consider
InBusiness Winter 09 65
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