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BUSINESSES IN DIFFICULTY
Business recovery and restructuring
• Often, even though businesses find themselves in difficulty,
they may possess some valuable characteristics (i.e. sound
management, an innovative product, etc).
• Sometimes, it is these valuable characteristics that should
be utilised to assist them in recovering from their difficulty.
• A constructive way of dealing with a business in financial
difficulty is to reorganise the business. Reorganisation is the
restructuring of a failing firm in an attempt to continue
operations as a going concern, and may involve any/all of
the following:
• reconstructing the financial structure of the firm/refinancing the firm
• introducing a flatter management structure
• closing down non-profitable operations and products
• divestitures, i.e. selling non-profitable assets, divisions, subsidiaries, etc
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