Restructuring Your Arizona Business

Phoenix lawyers advise and assist companies across Maricopa County

No matter how well your business is doing, it can always benefit from undergoing a reevaluation for potential improvements. At the Law Offices of Donald W. Hudspeth P.C., our accomplished Arizona business lawyers regularly assist companies with restructurings aimed at improving financial health, streamlining operations, addressing market changes or taking advantage of emerging opportunities. While this involves economic analysis, there are legal considerations as well. Our firm has experience providing practical guidance tailored to helping you achieve success.

What is business restructuring?

Business restructuring is the process of reorganizing a company’s operations, structure, debt or finances to attain varied benefits. This transformation can involve changes in management, ownership, business strategy and other aspects. A restructuring may be inspired by multiple factors, ranging from financial stress or instability to unexpected revenue to new growth opportunities. Some restructuring efforts require the approval of shareholders and/or compliance with legal requirements. 

Purposes and benefits of business restructuring

Companies restructure multiple goals, including these:

• Improved financial health — Restructuring can enable a company to cut operational costs, improve cash flow and eliminate unprofitable product lines. It can also reduce overhead, so the company can invest resources more economically.
• Better debt management — Companies may relieve financial distress by renegotiating loan terms, reducing the overall debt load, or extending repayment periods. This make it easier to secure favorable financing.
• Risk Reduction — Businesses that have identified areas of unreasonable risks can mitigate them by streamlining supply chains, diversifying revenue sources or cutting non-essential operations.
• Enhanced compliance — Restructuring can improve a company’s ability to comply with legal and regulatory requirements, thereby reducing the risk of fines or legal disputes.
• Tax efficiency — Consolidating operations in different regions can achieve tax savings through credits, deductions or more favorable brackets.
• Focus on core competencies — Divesting non-essential units allows a company to allocate resources more effectively to activities that bring the highest return on investment. 
• Managing growth — Small businesses formed as sole proprietorships or partnerships may be ready to become limited liability companies or corporations to take advantage of the benefits those structures confer.

Our business attorneys can assess your situation and help you design a plan to achieve your goals.

Forms of business restructuring

Depending on the goals and challenges faced by the organization, business restructuring can take several different forms, such as these:

• Divestiture strategy — A business may be able to improve financial health by relinquishing component parts in order to focus greater energy on more profitable operations. This can include selling assets, spinning off business units into independent companies or carving out equity through public stock offers or management buyouts.

• Debt restructuring — Businesses verging on insolvency can renegotiate their debts, working out debt repayment plans or equity swaps that allow for continuing operations while maintaining creditworthiness. 
• Financial restructuring — Companies can take advantage of high earnings by changing their debt-equity ratio, capital structure or asset allocation. This can help maintain long-term stability while mitigating against future business downturns.
• Joint ventures — Businesses can enter a short-term strategic alliance to collaborate on specific projects while remaining independent. Joint ventures allow businesses to pool resources, share risks, enter new markets or offer new product lines. 

Our business attorneys can evaluate your situation, work with financial consultants and accountants and provide legal advice geared toward implementing your restructuring plan.

Contact an experienced Phoenix law firm for guidance on business restructuring

At the Law Offices of Donald W. Hudspeth P.C., our Arizona business attorneys help companies manage the practical and legal intricacies of restructuring. Call 866-696-2033 or contact us online.