Restructuring a business can be a challenging time for a company; it’s often a period filled with uncertainty as owners look to extricate themselves from precarious financial positions while looking for effective ways to preserve the company and thrive in the future. So if you’re unsure as to how to turnaround a struggling business, wondering what is restructuring in business, or are considering using company restructuring services, we’ve put together this essential guide to help.

What is restructuring?

When companies are restructuring, it usually means that they’re assessing their financial and/or operational structure to ensure that it is operating efficiently. Restructuring may be carried out after a period of rapid expansion, after a merger with another company or simply as a result of the business having shifted direction significantly since its founding. However, it’s most commonly carried out in response to internal or external financial stress. Restructuring can be utilised to eliminate portions of the business that are no longer viable, find redundancies within the existing structure of the company or as a means to repackage existing company debt in a way that will allow operations to continue while ensuring that creditors are properly paid.

What is business insolvency?

Business insolvency is the result of a company not being able to pay its external creditors or to negotiate with them for better terms. In these cases, an external administrator is appointed to carry out business insolvency services. Creditors are then paid out as best as possible, usually via the liquidation of the company and the sale of its assets, or via the company being sold to a third-party buyer. 

What does a turnaround mean?

If a company has been in a period of financial duress or been through a restructure and begins to make a recovery, it’s often referred to as a “turnaround”. This is a positive sign for the business, as it’s an indication that the company is extracting itself from the issues that may have previously led to restructuring. A turnaround should be the ideal end goal of any company restructure, with the aim of not only preserving it but having it thrive into the future. 

At FerrierSilvia, we’re business recovery specialists who can help you develop an effective business turnaround strategy. To find out more about who we are and who we work with at FerrierSilvia, contact us today.