No two restructurings are identical. You may need to blend multiple strategies depending on your situation. These strategies are complementary, not competing. It can be helpful to wrap your head around different organizational categories to see how others think about restructuring.
Broadly speaking, a fundamental way to classify restructuring is by the area of the business affected.
By business function
Financial restructuring focuses on shoring up the balance sheet. This can be accomplished by improving capital structure, reducing debt burden, or increasing liquidity. You can do this through tactics like refinancing, equity issuance, and recapitalization.
Operational restructuring aims to boost internal efficiency. This can be accomplished by cutting costs, streamlining processes, or restructuring a supply chain. You can do so with tactics like downsizing, process re-engineering, outsourcing, or facility closures.
Strategic restructuring or portfolio restructuring refocuses the company on its core strengths through divestitures, mergers, or acquisitions. Entering new markets, increasing competitiveness, or finding new brand or product value can help a company accomplish long-term goals.
[Does Verita have an example they can share for any of these strategies? Example: Company Z divested non-core businesses to focus on primary revenue drivers.]
By strategic objective (the 4 R’s)
Corporate restructuring strategies focus on why the restructuring is happening and what the company aims to achieve. It is especially useful in turnaround situations or post-crisis planning.
Retrenchment Strategies (AKA when to scale back) is a defensive strategy focused on stabilization and cost-cutting. It can involve workforce reduction and asset liquidation. This typically involves financial and operational restructuring and is often triggered by financial distress or declining performance.
Repositioning (AKA when to pivot) involves shifting the company’s market stance or customer focus. It can involve product line adjustments, geographic expansion or contraction, and is often tied to strategic and operational restructuring.
Replacement (AKA when to make radical changes) involves overhauling leadership or management, core technology, or organizational structures. While often part of a broader restructuring, replacement acts as a distinct strategic lever.
Renewal (AKA when to grow again) includes investing in new growth opportunities, innovation, cultural transformation, or entering new markets. Often, this phase follows retrenchment and incorporates strategic and operational restructuring.
[Does Verita have an example they can share on any of these strategies?]
By brand and market identity (the R-framework)
Another perspective focuses on specific actions that impact external perception and brand evolution. This modern model is especially useful for market repositioning, digital transformation, or post-merger and acquisition identity changes.
Replace involves swapping out obsolete business models, leadership, or outdated product lines.
Restructure includes revamping the company’s internal architecture, including financial and operational structures.
Redevelop moves to improve or innovate company assets, products, or services. This can involve process improvements for product development or entry into new categories.
Rebrand involves changing the company’s image, name, logo, or market messaging to align with strategic repositioning.
[Does Verita have an example they can share on any of these strategies?]
Each of these actions overlaps with earlier strategies. Replace connects with leadership changes. Restructure covers financial and operational changes. Redevelop links to product or asset-focused improvements. Rebrand supports strategic repositioning efforts.
The Path Forward is Often Made of Multiple Strategies
Effective restructurings typically weave together multiple approaches. For example, a firm may engage in financial restructuring while also rebranding to signal a fresh start.
Whatever the approach may be, choosing the right combination is critical. That’s where Verita’s diagnostic expertise shines, helping stakeholders chart the smartest path forward.
[Placeholder: Insert Verita quote or real-life example of multi-pronged restructuring]
