Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Restructure

What it is:

Restructure, or restructuring, refers to the management process of reorganizing a company to make it more profitable. 

How it works (Example):

During a major transition, a buyout or a bankruptcy, for example, the management may consider restructuring a company.  A restructuring may include a variety of measures to eliminate diseconomies of scale, such as reorganizing and streamlining the management and operations, integrating management teams from the buyers or new owners or spinning-off, closing, or streamlining various operating units within the company.  It may also include a debt restructuring, involving renegotiating loan terms, conditions, and covenants that may be onerous or leave no room in the company's cash flows.  A related example might be a financial restructuring which may involve a repositioning of equity within the company, such as purchasing outstanding shares, creating new classes of stock, or going public or even "going private."

Restructuring usually involves new management, new capital, and a new opportunity to rethink the business organization and plan. A successful restructuring will usually result in a higher valuation of the company.

Why it Matters:

A restructured company, at least theoretically, is more focused, more efficient and more profitable.  However, a restructuring may affect and even dilute the stock values of the current stockholders of a company.

Related Terms View All
  • Tax-Advantaged Benefits Plan
    Let's assume Company XYZ employs 100 people and would like to start offering health...
  • Wealth Psychologist
    Let's say that John and Jane get married. John is a spender and Jane is a saver. Over the...
  • Mortgage Interest Deduction
    Each year, a mortgage borrower pays a combination of interest and principal to the lender...
  • Self-Insure
    Let's say John Doe owns a restaurant. He buys property and casualty insurance that only...
  • Quarterly Services Survey
    The Census Bureau administers the Quarterly Services Survey every quarter for companies...