The pluses and minuses of corporate restructuring

On Behalf of | Sep 22, 2021 | Business Transactions |

When a business is first established, it is planned and organized to be successful. However, over time, what it means to be successful can change. As a company expands, changes it overall purpose or deals with financial issues, it may require a restructuring. A corporate restructuring can be very beneficial, as it can reduce costs and make a company more profitable. While their benefits to restructuring, it is a process that requires much planning and paperwork. As such, it requires a strategy.

Corporate restructuring

The company Acorda Therapeutics, Inc. announced that it is undergoing a corporate restructuring. The company that develops therapies to help restore function to those living with neurological disorders has decided to restructure as a means to reduce costs and align operating expenses more closely to revenue. In addition to this, the company also announced that it will make changes to its management team.

Through this restructuring, Acorda will reduce its headcount by 15%, with most of its reduction in personnel taking place immediately. The remaining reduction is expected to be complete by the first quarter of 2022. The company has certain expectations for the corporate restructuring. Management hopes to save roughly $20 million in costs by reducing headcount and outsourcing certain operations. In contrast, the company is also aware of the costs it will incur. As a result of the restructuring, Acorda expects to incur roughly $3 million in pre-tax charges for severance pay and other related costs.

Changes in management

Although corporate restructuring has its benefits, there can be many working parts of this process. Thus, it is important that businesses consider what setbacks or downsides they may experience. When making major business decisions or going through a business transaction, it is important that they are carefully planned for in order to avoid any issues.

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