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Corporate Restructuring Strategies
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Merger
To enhance competitive position, increase market share or achieve economies of scale. Often employed when companies want to enter new markets or combine resources.
Acquisition
To access new markets or technologies, or to realize synergies. Employed when a company wants to quickly expand its operations or eliminate competition.
Divestiture
To shed unprofitable or non-core business units to refocus on core activities or raise capital. Often employed when certain divisions are underperforming.
Spin-off
To create an independent company through the sale or distribution of new shares of an existing business division. Employed to unlock the value of the division and sharpen strategic focus.
Split-off
To separate a subsidiary or division and offer shares of it to the parent company's shareholders in exchange for their shares of the parent company. Employed for tax advantages or to resolve conflicts of interest.
Split-up
To break up a company into separate, independent companies, typically through the distribution of existing shares. Employed when separate businesses will perform better individually.
Equity carve-out
To sell a percentage of a subsidiary to public investors, often to raise capital or to separate a division that may perform better as an independent entity.
Joint venture
To collaborate with another company to pursue a common business goal without merging the entire businesses, sharing risks and rewards. Employed when companies want to combine resources for a specific project or market entry.
Leveraged buyout (LBO)
To acquire a company using a significant amount of borrowed money to meet the cost of acquisition. Employed when investors aim for high returns by acquiring undervalued firms or to take a public company private.
Management buyout (MBO)
To enable a company's management team to acquire the business, often for the purpose of privatisation or to spin off from a larger entity. Employed for closer alignment of management with shareholders' interests.
Debt restructuring
To renegotiate the terms of a company's debt to achieve financial flexibility and avoid bankruptcy. Employed when a company faces cash flow problems and can't meet debt obligations.
Operational restructuring
To improve a company's operational efficiency, often through cost-cutting, layoffs, and reorganizing operations. Employed to return a company to profitability or prepare it for sale.
Refinancing
To replace old debt with new debt, possibly at a lower interest rate or on better terms. Employed to reduce interest costs and improve cash flow.
Portfolio restructuring
To alter the mix of a company's business units or investments to improve performance. Employed to focus on core businesses and divest from unrelated ventures.
Turnaround
To reverse a company's decline and restore it to profitability, often through operational and financial changes. Employed when a company is facing significant performance issues.
Liquidation
To dissolve a company by selling its assets, often when the company is insolvent. Employed to pay off creditors and close a failing business.
Downsizing
To reduce the size of the company's workforce to decrease costs and improve efficiency. Employed in response to decreased demand or during economic downturns.
Delayering
To reduce management layers to cut costs and speed up decision making. Employed when there is excessive bureaucracy or to promote a more responsive organizational structure.
Outsourcing
To contract out non-core business services or manufacturing processes to reduce costs and focus on core competencies. Employed to take advantage of specialized skills or cost advantages of external providers.
Insourcing
To bring processes or services previously outsourced back in-house to regain control or increase quality and integration. Employed when outsourcing does not yield expected benefits or compromises quality.
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