From bankruptcies to merger and acquisition transactions, restructuring events are widely covered by newspapers, television and social media sites. Less well known is what the decision to restructure means from the point of view of the corporate treasurer. Yet the implications of a restructuring can be significant, affecting everything from working capital and risk exposures to strategic plans to improve the company’s capital structure.
At a minimum, a corporate restructuring plan should take into account the following:
THE TREASURER PREPARES A STRATEGIC PLAN IN CASE THERE IS RESTRUCTURING
Protects intellectual capital with detailed job/process descriptions. A team’s knowledge base may be at risk if headcount is reduced.
Identifies which banks can best support the company during a restructuring. Review the company’s bank account structure in case of a change in geographical footprint or transactional volumes
Knows when investments can be liquidated and risk of financial loss. Sufficient liquidity is essential.
Security and risk management
Determines if liquid assets are protected and whether securities are safe-kept by another party. Departing employees should not have signatory privileges to key systems or access to bank portals.
Identifies unmet technology needs; assesses costs and
resources for new systems
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- To be effective in a restructuring, treasurers need to plan ahead by positioning themselves in a strategic role within the corporation.
- Treasurers can map out the questions that need to be asked and the measures that need to be taken to lead their teams through the restructuring process, mitigate potential risks and keep processes running smoothly.