Corporate Restructuring

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 in his ³Managing for the

{ £ 

  is the latest buzzword in corporate circles. { £ 

  is the corporate management term for the act of partially dismantling or otherwise reorganizing a company for the purpose of making it more efficient and therefore more profitable. It generally involves selling off portions of the company and making severe staff reductions. { ô  
£ 

  is not a new phenomenon in India. It has, however, become very profound after 1991.

ôorporate Restructuring Portfolio Restructuring

Organisational Restructuring

Functional Restructuring

P B 

£ 

  refers to change in the portfolio of businesses of the company. P If a firm is  

 
 by 

 some of its existing  
 

 or acquiring some   

 to produce the feeding raw±material for the main product, it is called B 

£ 

 . P It involves changes in the configuration of business in which a firm is operating through acquisitions. It is for making additions to or disposals from companies' businesses e.g. through acquisitions or spin-offs. Portfolio restructuring also has a high probability of improving performance, although the performance gain is likely to be much more modest than with financial restructuring.

{ Organizational Restructuring has been very common. { Decentralization, delayering or flattering and re-grouping of activities are important organizational restructuring measures. { Increase or decrease in activity levels, expansion or contraction of portfolio or functions etc. may cause modification of organizational structure. { ôhange in ôorporate Strategy such as portfolio strategy, sometimes call for organizational restructuring as often structure follows strategy.

P ñhe 

  

 
 
 survey reveals that restructuring of corporate functions (marketing, operations, personnel and finance) has been very significant both in the public and private sectors. P £ ô ñhe survey results show that the revamping of the marketing function meant the creating of a product management team, building up sales force, restructuring distribution system and creating marketing research cell. P ô
ô - As far as the modifying of the financial function was concerned the emphasis was on improving the financial reporting system.

P B£ ô Restructuring of operations has been very significant. Re-engineering has become very popular. ñechnological up gradation has been important concern. ñhe acceptance of total quality management and the requirements for ISO 9000 certification etc. have had significant influence on operational restructuring. P B£ 
ô - Personnel Function was found to receive high priority in restructuring. ñhe emphasis of both public and private sectors

  P Mergers and Acquisitions P ñender Offers P Joint Ventures

  P Spin ± Offs { Split-Offs { Split-Ups P Divestitures P Equity ôarve-outs



 
 P Premium Buy-backs P Standstill Agreements P Antitakeover Amendments P Proxy ôontests

   
  

 P Exchange Offers P Share Repurchases P Leveraged Buy-outs

{    means combining of two commercial companies into one. - Oxford Dictionary {    is a fusion between two or more enterprises, whereby the identity of two or more is lost and the result is a single enterprise. {    is an arrangement for bringing the assets of two firms under control of one.

P hen two or more companies agree to combine their operations, where one company survives and other loses its existence, a merger takes place. P ñhe surviving company acquires all the assets and liabilities of the merged company. P ñhe company that survives is generally the buyer and it either retains its identity or the merged company is provided with a new name. P A basic feature of merger is that one company takes the ownership of another company and combine its operations with that of its own operations.

PÑORIZONñAL MERGER PVERñIôAL MERGER PôONGLOMERAñE MERGER

~
 ~ ~ P Negotiated Merger P ñender offer P Ñostile ñakeover Bid P Arranged Merger P Reverse Merger

ÿ ñhe authorized, issued and subscribed/paid up capital of the transferor/transferee company. ÿ Size of Board of Directors and Participation of ñransferee ôompany¶s director¶s on the board. ÿ ñerms and conditions of the scheme of amalgamation/merger and effective date of amalgamation. ÿ Fixing of a cut-off date from which all assets both movable and immovable of amalgamating company shall be transferred to the amalgamated company. ÿ Deciding the name and accounting year.

~
      { Object clause of the memorandum of association of the transferor and transferee companies so as to determine whether the power of amalgamation exits or not.. { ñhe scheme must provide protection to the existing employees. { Obtaining of approval of shareholders, creditors, financial institutions/banks { Expenses of amalgamation { Dividend position and future prospects.

 Ƭ    ÿ ÿ ÿ ÿ ÿ ÿ ÿ

Analysis of Proposal by the ôompanies Determining Exchange Ratio Approval of Board of Directors Approval of Shareholders ôonsideration of interests of the ôreditors Approval of the ôourt Approval of Reserve Bank of India