Essay: Corporate Restructuring

17 Oct

Essay: Corporate Restructuring

Sample Essay

The numbers of business corporations that have employed restructuring strategy have sky rocked in the recent past up to date. But the worth question as it shall be addressed by this paper is whether or whether not restructuring results to desired outcome rather than its popular application.

In order to address this thorny issue that has proved to be at center stage for controversial debates in corporate business practices, it is a point of worth to shade light on the essentials of restructuring.

According to Blair et al. (1991), corporate restructuring or as other scholars terms it either financial restructuring or debt restructuring;  as a business strategy refers to the practice of reorganizing a firm for the purpose of making it more profitable. There are three basic forms of restructuring: financial, organizational, and portfolio. But scholars assert that financial restructuring has the highest positive impact on performance, while portfolio restructuring is placed second with organizational restructuring coming third due to perceived little consistent impact on performance. In most cases, corporate restructuring is done as part of:  a strategic takeover by another firm in form of a leveraged buyout or a bankruptcy. Outsourcing of financial and legal expertise is a more prominent practice during restructuring with an aim of reducing losses and tension between equity and debt holders to have quality resolutions (Vishny and Shleifer, 1992).

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