Although no company is born with the need to be restructured, growth and diversification often create challenges that make it imperative to rethink the organisational structure. But when is the right time to restructure your company? Let’s look at the key signs and some practical examples.
Why does growth drive the need for restructuring?
As a company grows, it is common for it to diversify its business lines, broadening its portfolio beyond its core business. This diversification, while beneficial, introduces different types of risks that need to be properly managed. Manuel Urrutia of Confianz points out that growth can generate financial and operational stresses that require restructuring to be managed effectively.
Signs indicating the need to restructure
- Financial risk: If different business areas have disparate payment and collection schedules or inconsistent cash flows, it is advisable to consider separating these units into different legal entities. This strategy facilitates negotiation with investors and financial institutions, allowing for more efficient management of financing needs.
- Labour risk: Companies with divisions that have significantly different labour requirements, such as variations in the number of employees or union obligations, may benefit from restructuring. By segmenting these units, the labour particularities of each can be managed more effectively.
- Commercial or operational risk: Different business units may serve different types of customers or have different profitability margins. A restructuring allows commercial and operational strategies to be tailored to the specific needs of each segment, thereby optimising the company’s overall efficiency and profitability.
Practical cases of restructuring in Spain
In Spain, several companies have successfully restructured to adapt. For example, Clínica Baviera, specialising in eye care, has experienced significant growth, expanding to 135 clinics in Europe and performing 180,000 interventions per year. This expansion has required a restructuring to efficiently manage its operations and maintain its focus on reliable techniques and continuing education.
Another example is Caser, the Spanish insurer which, under the new leadership of Juan Estallo, has initiated an organisational transformation with a clear focus on the customer. This restructuring aims to create a more flexible and market-oriented organisation, strengthening key areas such as technology, human resources and strategy.
In addition, Banco Sabadell decided to move its headquarters back to Catalonia after several years in Alicante. This strategic move, in the midst of a takeover bid by BBVA, seeks to secure the loyalty of Catalan shareholders and to take advantage of a more stable political climate in the region.
Benefits of well-planned restructuring
Adequate restructuring can offer multiple benefits:
- Resource optimisation: Aligning the organisational structure with the specific needs of each business unit allows for a more efficient allocation of financial and human resources.
- Improved risk management: By segmenting business units according to their risk profiles, it facilitates the implementation of more effective mitigation strategies.
- Increased profitability: Tailoring operational and commercial strategies to the particularities of each segment can lead to improved profit margins.
- Attracting investors: A clear and well-defined organisational structure can be more attractive to potential investors, facilitating access to capital for future expansion.
It is important to stress that restructuring is not a one-off event, but a continuous process that must be aligned with the evolution and growth of the company. As our chairman, Manuel Urrutia, points out, «when you start with restructuring, you don’t stop seeing improvement actions, so it’s a virtuous circle».
Are you considering a restructuring for your company? Our team of experts is ready to help you identify the opportunities and strategies that best suit your needs. Contact us for a personalised consultation and find out how we can boost the success and sustainability of your business.