Company restructuring:
Ways to success

What does restructuring mean?

Restructuring refers to the process by which a company makes significant modifications to its organisation and operations. The main objective of these measures is to increase efficiency, reduce operating costs and improve competitiveness. These changes can affect various aspects of the company, including organisational structure, business processes and personnel management.

Why is restructuring important?

Restructuring is crucial in order to be able to react to dynamic market conditions and internal challenges. They increase the company’s flexibility and adaptability. In the context of change management, these processes include targeted initiatives to effectively manage organisational change and actively integrate employees into this process. Restructuring measures are key to ensuring long-term stability and consolidating the company’s market position.

Restructuring measures and species

Various restructuring measures make it possible to effectively adapt a company’s organisational structures and finances.

The three central restructuring measures:

1. Restructuring: Restructuring is aimed at stabilising a financially ailing company. The core measures include reducing costs, restructuring debt and increasing operational efficiency.
2. Insolvency plan: An insolvency plan is used to restructure and reorganise a company during insolvency. The aim is to revitalise the company and return it to profitability in the long term.
3. Cost reduction: Cost reduction strategies include the reduction of operating costs, the optimisation of business processes and, if necessary, the discontinuation of unprofitable business areas.

What types of restructuring are there?

The restructuring of a company can affect different areas depending on the focus.

Personnel restructuring: Personnel restructuring primarily relates to a company’s workforce and can include the following measures:

• Downsizing: reducing the number of employees to reduce costs or adjust the company’s structure.
• Transfer: Relocation of employees within the company in order to utilise skills more effectively or to fill new areas of responsibility.
• Qualification: Further training of employees to prepare them for new challenges and expand their skills.

Departmental reorganisation: The reorganisation of departments pursues objectives such as:

• Increasing efficiency: merging or splitting departments to optimise processes and avoid duplication of work.
• Flexibilisation: Introduction of agile structures for faster adaptation to market changes.
• Innovation: Creation of new teams or departments to promote innovation projects.

Financial restructuring: The aim of financial restructuring is to improve the company’s financial situation through:

• Debt restructuring: Replacing existing loans with new loans with more favourable conditions.
• Capital increase: Raising additional capital by issuing new shares or taking on new shareholders.
• Sale of assets: Liquidation of non-operating assets to generate capital.

Operational restructuring: Operational restructuring focuses on operational procedures and processes with the aim of increasing efficiency and reducing costs:

• Process optimisation: analysis and improvement of existing processes to save time and resources.
• Automation: Use of technology to minimise manual activities and reduce errors.
• Outsourcing: Outsourcing specific tasks or processes to external service providers.

Strategic reorganisation: Strategic reorganisation is the most comprehensive form and includes

• Market entry: entering new markets or customer segments.
• Product development: Development and introduction of new products or services.
• Diversification: Expansion into new business areas.
• Merger or acquisition: Merging with or acquiring other companies.

When is a corporate reorganisation necessary?

A corporate reorganisation is not only necessary in times of crisis. Rather, it can be a proactive step to prepare the company for future challenges and tap into new growth potential. However, there are certain indicators that could point to an urgent need for action.

6 Typical signs of a corporate crisis:

1. Falling sales and profits: A continued negative trend in the key financial figures signals an urgent need for action.
2. Rising costs: If costs overtake revenues, there is a risk of loss of profitability and liquidity bottlenecks.
3. Loss of market share: The competition catching up can be an indication of declining competitiveness.
4. Outdated structures and processes: Inefficient workflows and sluggish decision-making processes indicate a need for modernisation.
5. Dissatisfied employees: High staff turnover and declining employee motivation are often symptoms of a problematic corporate culture.
6. Changing market conditions: Adjustments are necessary when new technologies, changing customer requirements or legal innovations reshape the market.

The earlier these signs are recognised and appropriate measures are taken, the greater the chances of averting a crisis and getting the company back on the road to success.

The advantages of early restructuring

Timely restructuring offers numerous advantages:

1. Crisis prevention: proactive action can avert serious problems and secure the company’s ability to act.
2. Competitiveness: Restructuring makes it possible to adapt quickly to market changes and seize new business opportunities.
3. Increasing efficiency: Optimising processes and structures can reduce costs and increase productivity.
4. Employee motivation: Open communication and the involvement of employees increase their motivation and commitment.
5. Long-term stability: Successful restructuring consolidates the company and ensures its future viability.

Although restructuring is not a panacea and requires careful planning, with the right strategy and professional support it can make a decisive contribution to the company’s success.

Concrete restructuring steps

Effective restructuring requires a structured process in clearly defined phases. Each phase aims to make the process efficient and goal-orientated.

Analysis: The first crucial step in a restructuring process is the analysis, which aims to gain an in-depth understanding of the company’s current situation and identify primary problem areas.

• Stocktaking: Comprehensive assessment of the financial, operational and organisational status of the company.
• Identification of weak points: Identification of inefficient areas or unnecessary use of resources.
• Market analysis: Analysis of market dynamics, competition and customer requirements in order to recognise external influencing factors.

Planning: In this phase, concrete goals and measures are derived from the results of the analyses, which determine the roadmap for the restructuring.

• Goal setting: Definition of clear and achievable goals for the restructuring.
• Strategy development: Development of strategies and action plans to achieve the objectives.
• Resource planning: Determination of the required resources such as finance, personnel and technology.
• Timetable: Detailed time planning for the implementation of the restructuring measures.

Restructuring phase: The active realisation of the planned measures takes place in this phase, which requires precise implementation and continuous monitoring.

• Implementation: Realisation of the planned changes, including process optimisation and organisational adjustments.
• Communication: Ensuring transparent and regular communication with all stakeholders.
• Employee involvement: Promoting acceptance and motivation by actively involving employees in the restructuring process.

Monitoring: This phase serves to check the effectiveness of the implemented measures and to ensure that the objectives have been achieved.

• Monitoring and evaluation: Continuous monitoring of progress and comparison of the results with the targets set.
• Adjustments: Implementation of corrections to optimise the process, if necessary.
• Final report: Preparation of a detailed report summarising the restructuring results and documenting lessons learnt for future projects.

How can restructuring be successfully implemented in the company?

Effective corporate restructuring requires careful planning, clear communication and extensive employee involvement. Here are five essential strategies for implementing a restructuring sustainably and successfully:

1. develop customised solutions

Every company has individual needs that standardised approaches often fail to meet. Consider the specific needs and challenges of your company.

2. involvement of the workforce

Open communication and active involvement of employees are essential for the success of the reorganisation, as they create trust and promote acceptance of the changes.

• Transparent communication: Inform employees about the reasons, measures and objectives of the reorganisation.
• Employee participation: Actively involve employees in the process, for example through workshops and feedback rounds.

3. support from experts

Complex restructuring requires specialised knowledge. Use the expertise of specialist consultants and involve the works council at an early stage.

• Specialist consultants: Experts in corporate restructuring can support well-founded decisions.
• Works council: Cooperation with the works council helps to protect the interests of employees and avoid conflicts.

4. clear objectives and strategy

Set clear, achievable goals and develop a detailed strategy to achieve them.

• Define goals: Determine what goals are to be achieved with the reorganisation.
• Develop a strategy: Describe the steps to achieve these goals.

5. continuous monitoring and adjustment

Monitor the progress of the reorganisation regularly and make adjustments as necessary.

• Monitoring: Regularly evaluate the results achieved.
• Adjustments: Make adjustments as needed to achieve goals.

Our specialist consultants for the restructuring of companies

The successful restructuring of a company requires comprehensive specialist knowledge and experienced expertise. At LW.P Lüders Warneboldt, you benefit from the support of our interdisciplinary team, which will guide you through every phase of the restructuring process. Our specialist consultants have in-depth expertise in the fields of tax, legal and auditing as well as management consulting. They develop customised solutions that are precisely tailored to the specific requirements and challenges of your company.

Good advice in challenging times!

Our team will guide you through all the complex stages of restructuring – from detailed analysis and strategic planning to precise implementation and ongoing monitoring. We are at your side as a reliable partner and guarantee advice based on integrity, expertise and goal-orientation. Contact us to find out more about our consulting services. Together we will guide your company on the path to sustainable success.