Corporate Restructuring

3389 words 14 pages
Corporate Restructuring:
Corporate restructuring is one of the most complex and fundamental phenomena that management confronts. Each company has two opposite strategies from which to choose: to diversify or to refocus on its core business. While diversifying represents the expansion of corporate activities, refocus characterizes a concentration on its core business. From this perspective, corporate restructuring is reduction in diversification.
Corporate restructuring is an episodic exercise, not related to investments in new plant and machinery which involve a significant change in one or more of the following * Pattern of ownership and control * Composition of liability * Asset mix of the firm.
It is a comprehensive process by
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Simply stated, Corporate Restructuring is a comprehensive process, by which a company can consolidate its business operation and strengthen its position for achieving its short term and long term corporate objective.
Few objectives of Corporate Restructuring are pointed below * Orderly redirection of the objectives of the firm. * Surplus of one business can easily be transferred to another business for growth of another business. * Exploiting inter-dependence among present or prospective businesses within the corporate portfolio. * Risk is also can reduced by this process, because the risk is divided between both the businesses. * Core competencies of the companies can also developed.

TYPES OF CORPORATE RESTRUCTURING In today’s era Mergers, Amalgamations, takeovers has become day to day activity. Many mergers and amalgamations are taking place all over the world. We all are well acquainted to these words. When two or more companies are added together to form a new entity for better synergy, we terms it as merger or amalgamation. But there are many types of corporate restructuring which people combine under the umbrella of words mergers and amalgamation. Let us try to understand the difference between these terms. The words merger and amalgamation are always interchangeably used. Many interpret mergers and amalgamations as synonyms. Indian Companies Act, 1956 does not differentiate between the

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