20 Corporate Restructuring Key Terms
Welcome to our guide on the top 20 key terms related to corporate restructuring. Whether you’re a business owner, employee, or simply interested in the world of finance and management, this list will help you understand some of the most important concepts and phrases used in corporate restructuring.
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Corporate Restructuring: The process of significantly modifying a company’s business model, organizational structure, strategy, or finances.
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Merger: The combination of two or more companies into a single entity, typically by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their shares.
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Acquisition: The process where one company takes over another company and becomes the new owner.
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Divestiture: The disposal of a business unit through sale, exchange, closure, or bankruptcy.
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Spin-Off: A type of divestiture where a company creates a new independent company through the sale or distribution of new shares of an existing business.
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Leveraged Buyout (LBO): The acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition.
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Downsizing: Reducing the size of a company by eliminating staff and/or divisions within the company.
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Rightsizing: Reorganizing or restructuring a company to meet current economic conditions, often involving layoffs or downsizing.
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Bankruptcy: A legal proceeding involving a person or business that is unable to repay their outstanding debts.
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Reorganization: The process of restructuring a company’s business affairs, structures, and operations, often when facing financial difficulties.
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Debt Restructuring: A method used by companies to alter the terms of their debt agreements to achieve some advantage.
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Equity Financing: Raising capital through the sale of shares in a company.
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Debt Financing: Raising capital by borrowing money that must be repaid over time, usually with interest.
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Liquidation: The process of bringing a business to an end and distributing its assets to claimants.
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Turnaround Management: The process of revitalizing a struggling company, typically by improving operational efficiency and financial stability.
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Asset Sale: Selling off a company’s assets to raise capital or pay off debt.
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Joint Venture: A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task.
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Management Buyout (MBO): A form of acquisition where a company’s existing managers acquire a large part or all of the company.
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Private Equity: Capital that is not listed on a public exchange and is composed of funds and investors that directly invest in private companies.
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Workout: A process designed to help a company overcome financial difficulties and return to financial health.
These terms provide a foundational understanding of various strategies and processes involved in the restructuring of corporations, which can be essential for organizational recovery and strategic redirection.
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