Restructuring Services: As the word suggests, it deals with Restructuring Services specific to a business’s operations, capital, and strategies. It manoeuvres the processes and structure of a company or an entity by modifying its capital usually. Restructuring is a very efficient tool when a company or an entity is experiencing significant problems or financial jeopardy. Restructuring might be many reasons like lack of profits, reverse synergy, cash flow requirement, or change in the strategy of a company or entity.
When an organization is in severe financial jeopardy, the management seeks a financial and legal expert for advisory and assistance restructuring its organization by reviewing its negotiation process and transaction deals. The concerned party may look at debt financing, operations reduction, any portion of the company to interested investors.
In addition to the above, change in the company’s structure, and Ownership also calls for corporate Restructuring. An organization’s Ownership and structural changes may be due to numerous reasons, e.g., mergers, takeovers, difficult and perturbing economic conditions, unfavourable changes in business such as buyouts, bankruptcy, and lack of integration between the division’s over-employed personnel, etc.
Restructuring services can be broadly classified into two categories:
Financial Restructuring Services, wherein the company or the entity, due to a severe fall in the overall sales because of the adverse economic conditions, alter its equity pattern, debt-servicing schedule, the equity holdings, and cross-holding pattern. Companies do such things to sustain the market and the profitability of the company.
Organizational Restructuring Services, wherein a company or an entity welcomes a significant change in its organizational structure, such as reducing its hierarchy level, redesigning the job positions, downsizing the employees, and changing the reporting relationships. Companies do such Restructuring to cut down the cost and pay off the outstanding debt to continue with the business operations.
Restructuring draws us to certain factors that are of utmost importance when a company or an entity considers Restructuring: Legal and procedural issues, Accounting aspects, Human and Cultural synergies, Valuation and funding, Taxation and Stamp duty aspects, Competition aspects etc.
In the UAE, Restructuring has become a prerequisite to ensure compliance with the new laws and regulations and the changing business patterns. For a business to sustain and survive in UAE, Restructuring should be on the to-do list. Restructuring teams perform functions inclusively of assisting companies and stakeholders to address pressures and effect turnarounds, regain control, manage the crisis, improve return to creditors, and limit exposure to risk and bad debt through a full suite of services. The team of Enterprise House, independent member of FinExpertiza and member of forum of firms, helping clients rapidly identify specific issues and opportunities while creating a more engaging experience for better alignment, focus, and speed to action.
Munshi Atik Chartered Accountants (formerly Enterprise House Chartered Accountants) helps you assess and evaluate your business practices and organisational structure in detail to identify problem areas that may be slowing you down or incurring higher than necessary costs for you. Based on such assessments, we suggest detailed plans of actions and recommendations that can be implemented for restructuring the organisation.
Business Restructuring in UAE
Good entrepreneurs understand when the time for change has come and instantly take appropriate measure for the essential and necessary transformation to be on the safe side. An audit will be conducted in order to identify the reasons and drawbacks and analyse all the factors which need to be addressed. There are many signs to restructure your business for the growth or to sustain in the market such as:
1. Profit comes to screeching halt
2. Turnover is high
3. Loans & bankruptcy
4. Morale is low
5. Old fashioned systems
6. Employees are overworked
7. Employees are under utilized
8. Poor communication
9. Lack of management
10. Market is evolving
11. Excessive debt
12. Tax Laws
13. Shift in prices
14. Labor issues
15. Market Demand