Restructure
What it is:
Restructure, or restructuring, refers to the management process of reorganizing a company to make it more profitable.
How it works/Example:
During a major transition, a buyout or a bankruptcy, for example, the management may consider restructuring a company. A restructuring may include a variety of measures to eliminate diseconomies of scale, such as reorganizing and streamlining the management and operations, integrating management teams from the buyers or new owners or spinning-off, closing, or streamlining various operating units within the company. It may also include a debt restructuring, involving renegotiating loan terms, conditions, and covenants that may be onerous or leave no room in the company's cash flows. A related example might be a financial restructuring which may involve a repositioning of equity within the company, such as purchasing outstanding shares, creating new classes of stock, or going public or even "going private."
Restructuring usually involves new management, new capital, and a new opportunity to rethink the business organization and plan. A successful restructuring will usually result in a higher valuation of the company.
Why it matters:
A restructured company, at least theoretically, is more focused, more efficient and more profitable. However, a restructuring may affect and even dilute the stock values of the current stockholders of a company.