What are the reasons for Corporate Restructuring?

Corporate Restructuring is an act of reorganizing the legal, ownership, operational or other structures of a company for the purpose of making it more profitable, or better organized for its present or future needs. 

The possible reasons are:

1. Change in the strategy
   • Positioning the company to be more competitive
   • To move in an entirely new direction
2. Lack of profits
   • When the company or a division(s) is not profitable enough to cover the firm’s cost of capital and cause economic losses.
3. Reverse synergy
   • When the individual divisions is worth more than the combined unit. 
   • More value may be unlocked from a division. 
4. Cash flow requirement
   • If the company is facing some difficulty in obtaining finance, selling an asset is a quick approach to raising money and reduce debt. 
5. Managerial effectiveness
6. Diversification
7. More competitive positioning of the firm
8. Surviving adverse economic climate