What Is Restructuring?
There are many scenarios where a business either outgrows it’s current structure, or is held back by it. Restructuring is the general term for looking in detail at the business and how it is structured, and ascertaining if there is a more suitable structure to meet the company’s needs both now and in the future.
An example may be a business that has grown over a number of years and has two or more distinct divisions or areas of business. It may be desirable for practical purposes that the divisions are operated as separate companies, or that a structure with a holding company is beneficial. This is a complex area and depends vastly on the nature of the business, the controlling parties, the directors, the company’s strategic goals, and not least the tax implications.
Another example may be a company or a group of companies that wishes to sell part of the business. There are a wide range of considerations with regard to the structure of the sale. Selling shares in a company or selling assets will have very different taxation considerations for both parties and will often be a key part of the sale negotiations. It is important that this is considered early on in the process, and any desirable changes to the current structure made at the appropriate time and (importantly) after taking appropriate advice.