A Guide To Business Restructuring

Business Restructuring

There are many reasons a business may choose to go through a restructuring. They could be growing, and the model which fits a company of 10 employees no longer suits a company with 50 employees. Or perhaps a business is preparing for sale and needs to become a smoother operator to gain a higher sale price.


If you’re looking at restructuring for a sale, Rockwell Bates has the team to help you. 

This article will help you understand what a restructure is and some reasons businesses go through with one, and we will give you some tips on how to move through a restructure.


What Does Restructure Mean In Business?

A business restructuring is where a business changes its financial and/or operational aspects when faced with different business pressures.

The goal of a restructure is to be beneficial to the business through more efficient operations. This can be reflected in better operations thanks to staffing restructure, better profits or servicing of debts.


Why Do Companies Restructure?

There are 4 main reasons a business would go through a restructure.

  • Expansion – Your business is growing. The number of employees is ballooning, you are expanding into new premises, or perhaps you’re buying and incorporating another business into yours. The restructure could be the creation of new teams or formalising team roles to accommodate that business growth.
  • Management – The growth of your company has meant you need more managers or new managerial roles to cover the growth. Perhaps there is now some redundancy, and management needs to be re-spaced.
  • Financial distress– your business is not profitable through inefficiencies and costs being too high. A restructure is in order to trim the fat and make processes leaner.
  • Legal reasons – updated government policies and regulations, or changes in laws, may cause your business to restructure to remain compliant.


How To Restructure A Business

Restructuring a business is a big endeavour, one which will take time and effort and the help of other people. 

Here are 5 steps you need to consider when restructuring your business.

Create An Action Plan

It is an unwise move to try a business restructure without a plan. If you don’t know what your goals are, or how many steps it will take to achieve them, you could fall short. The business plan, or strategy, can also give insight as to why management feels the need to restructure. A new plan, with a bigger scope, can provide motivation, and purpose, to the restructuring. It can help people make sense of it all. We recommend having SMART goals when creating your action plans, and checkpoints to know you’re hitting your goals. This way, you can also measure your progress and success.


The Right Team

You want the right people pushing and implementing your restructure. The right people include management and staff who will be impacted the most by a restructure. A Project Lead is essential, someone who can coordinate and communicate the big picture, and talk about the smaller tasks involved along the way. HR representation is a good idea, to consider the staffing concerns around the restructure. We also recommend having legal advice on your team. You don’t want to change your business, only to find out the new look does not consider any new laws or regulations. If you need legal advice, ask Rockwell Bates.


Design The New Business Structure

What is the new business structure going to look like? Where do people now sit on the org chart?

Changes in management need to be reflected, shifting of staff into new teams, and so forth. If there are changes to employee roles, this needs to be reflected in the new structure as well. This new structure will show the chain of command, and the relationships between teams and departments. The design needs to be clear and easy to read, covering all aspects of the new-look business structure. If there are any gaps, then the process of changing your structure will fracture. Be thorough in this process.


Communicate The New Business Structure

Throughout this whole process, be open with the communication with your staff. The reasons why you’re going through a restructure, the changes to the business, and to the people employed by the business. Be open to feedback. It gives ownership to those who are affected by the change, and a chance for staff to influence their own destiny in the new business structure. They can feel less like passengers and more like contributors, feel a genuine part of the company. Try to be positive with your communication. While sometimes the reason for restructuring are dire, the outcomes are for the good of the company, and the staff involved. Ultimately, you’re restructuring for positive reasons, and this needs to be conveyed.


Launch Your Business Restructure

Launch your new structure, but don’t expect change immediately. You need to give a bit of time for the staff and the business itself, to adjust to the new way of doing things. You also need some time to gather data. And with all SMART goals, you compare data and make changes where you can, to endure the restructure is a positive thing. Also, be bold with your launch. If you’ve put the right work into it, had the right team involved, and were open with your communication to your staff, then it is highly likely to work, and you should champion it. Don’t doubt your decision.


 For More Legal Advice Regarding Business Restructuring, Book a Consultation With Rockwell Bates

Restructuring, for whatever reason you choose to, or have to, needs to bring about a positive change for your business. Putting in all that work on your business could energise you to grow and build the business to bigger and better things. We’ve given you some advice here, but we’re available to provide you with more detailed help when it comes to business acquisition, which includes how to restructure.

Adam Levine

With Over 25 years private practice and investment banking experience, coupled with experience gained in the private investment sector, Adam is one of Australia’s leading lawyers in the area’s of Private Equity, Mergers & Divestments and Deal Structuring.

Managing Director