Types of Restructuring: Definitions and Management Tips

Restructuring is a process that organizations may use to address financial and operational challenges. It can involve a variety of actions, including changes to the company’s business model, capital structure, ownership, operations, and other strategic initiatives. Over the years, the drivers of restructuring have changed, resulting in the development of different types of restructuring strategies. In this blog post, we’ll discuss the different types of restructuring and their benefits and potential drawbacks. We’ll also provide some practical tips for successfully implementing a restructuring plan. By understanding the various types of restructuring and their implications, organizations can make informed decisions about how to move forward and ensure long-term success.

Types of Corporate restructuring || Part 1 || lesson 1 ||

What are the benefits of restructuring?

Examples of potential advantages that businesses may use to direct their restructuring efforts include the following:

What is restructuring?

Restructuring is a term used to describe situations where businesses decide to change their operating procedures, organizational structures, business models, or financial spending. Restructuring can also take place on a smaller scale at the departmental level, where managers rearrange roles, priorities, and budgets.

Types of restructuring

Here are some instances of various restructuring types and their timing:

Legal restructuring

When business leaders decide to establish a company as a separate legal entity, they engage in a type of restructuring called “legal restructuring.” Another goal of legal restructuring in business is to assess the moral standards and operating procedures within an organization and develop a legal framework to make sure every division follows the law.

Turnaround restructuring

Any restructuring efforts that aim to replace product lines, business models, organizational structures, cultures, and other elements that don’t support a company’s success are referred to as turnaround restructuring. This can be seen, for instance, when business executives decide to stop producing a key product because of weak demand and sales. They can use this information to create a new product or line of products that correspond to the updated needs of consumers in their sector.

Cost restructuring

Cost restructuring is a strategy used by businesses to maintain operations before or during economic downturns. Consequently, department budgets must be restructured, and furloughs, layoffs, and other cost-cutting measures must be implemented.

Repositioning restructuring

Companies use repositioning, a type of restructuring, specifically when they want to alter their business model and refocus their attention. An illustration of this would be if a significant clothing retailer expanded their business model to include furniture and accessories for the home.

Spin-off restructuring

Spin-off restructuring describes the procedure by which a business transforms one or more branch offices or business units into independent legal entities. This raises the company’s value and enables it to assume the function of a parent organization.


Divestment is a form of restructuring where businesses close branch offices, departments, or other business units as a result of altered business needs or anticipated profitability. For instance, a business might abolish its community engagement division and transfer staff to the marketing division.

Mergers and acquisitions

When a company consolidates branch offices or names one person as the head of several departments, it is referred to as a merger or acquisition.

Tips for managing a team during restructuring activities

Review the following advice to inform your management tactics as you engage in restructuring activities:

Maintain transparency throughout the process

You can assist your team in getting ready for changes and adjusting to new ideas about their roles or organizational procedures by keeping lines of communication open with them about what the restructuring process entails and how it might affect them.

Make yourself available for employee discussions

Make sure to emphasize your office hours and communication channels both before and during the restructuring of your business or department to help your team feel more at ease. This demonstrates to staff members your interest in their ideas or opinions while also providing an opportunity for them to voice any worries they may have regarding impending changes.

Highlight the end goals of restructuring activities

You can encourage your team to adopt a positive attitude when announcing restructuring activities by highlighting the potential advantages and transformational outcomes. Make sure to continually highlight benefits during company or departmental changes because doing so encourages workers to refocus on productivity and keeps in mind that current changes may result in a better workplace in the future.

Offer training courses to employees

Consider making it a top priority to provide employees with the training and resources they need to adapt and keep succeeding at your business if restructuring activities require them to adapt to new roles or use new technologies. This can help you maintain employee satisfaction and productivity.

Show support for your employees health and happiness

During the restructuring process, you can make the transition easier for the staff by demonstrating your concern for their welfare. You can do this by rewarding your team’s hard work with breakfast or lunch or by encouraging workers to take time off to improve their mental health.

Monitor employee performance during and after restructuring

It’s crucial to keep an eye on employee performance both during and after the restructuring process to ensure that your staff members successfully adjust to the changes. Make it a point to speak with them and provide them with the support they need to adjust to changes if you notice lower productivity or another performance indicator.


What are the different types of restructuring?

Types of restructuring
  • Legal restructuring. …
  • Turnaround restructuring. …
  • Cost restructuring. …
  • Repositioning restructuring. …
  • Spin-off restructuring. …
  • Divestment. …
  • Mergers and acquisitions. …
  • Maintain transparency throughout the process.

What are the four types of corporate restructuring?

5 Different Forms of Corporate Restructuring
  • Mergers & Acquisitions. Adding an existing business to your own is one of the best ways to boost profitability in a company quickly.
  • Divestment and Spin-Offs. …
  • Debt Restructuring. …
  • Cost Reduction. …
  • Legal Restructuring.

What are the three restructuring strategies?

Downsizing, downscoping, and leveraged buyouts are the three different restructuring techniques.

What are examples of restructuring?

The sales tax and property tax sectors are two examples of restructuring that are frequently used. The first entails setting up a leasing company for working capital that can result in revenue tax and sales tax savings.

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