Business Restructuring as a Method of Strengtening Company’s Financial Position

Authors

1 BA School of Business and Finance, Riga, Latvia,

2 V.N. Karazin Kharkiv National University, Kharkiv, Ukraine

3 Ukrainian State University of Railway Transport, Kharkiv, Ukraine

4 European University, Kyiv, Ukraine,

5 Kharkiv Petro Vasylenko National Technical University of Agriculture, Kharkiv, Ukraine,

6 Ukrainian State University of Railway Transport, Kharkiv, Ukraine,

10.22094/joie.2020.677839

Abstract

Restructuring  is relevant for companies that have free capital and need to expand for development purposes, as well as for companies that have relatively large problems with financial results and the relevant indicators indicate the necessary changes. Motives of the restructuring may be different, the authors put forward the following reasons: operation operational synergy, financial synergy, diversification, economic motives. Restructuring is one of the key methods  for company’s financial position strengthening. Motives of restructuring are various, but the objective  is company's value increase and  the strengthening of financial  position. The authors investigate the essence  of the company's financial strategy, studied restructuring as a modern approach of company development in the crisis period, as well as the company's valuation and financial analysis methods, which were used for restructuring.

Graphical Abstract

Business Restructuring as a Method of Strengtening Company’s Financial Position

Keywords


Alaminos, D., Castillo, A. del, and Fernandez, M. (2016). A Global Model for Bankruptcy Prediction. PLoS ONE, 11(11). Retrieved on March, 4, 2020, from: http://doi:10.1371/journal. pone.0166693
Altman, E.I., Hotchkiss, E., and Wang, W. (2019). Corporate Financial Distress, Restructuring, and Bankruptcy: Analyze Leveraged Finance, Distressed Debt, and Bankruptcy. Hoboken: John Wiley & Sons.
Arnold, G., and Lewis, D. (2019). Corporate Financial Management, 6th Edition, Pearson education.
Bahram, M.N. (2011). Reviewing of Strategic Planning and Management on privatization process. Proc. 5th WSEAS International Conference on Management, Marketing and Finances (MMF '11), Playa Meloneras, Gran Canari, 73-80. Retrieved on March, 4, 2020, from: http://www.wseas.us/e-library/conferences/2011/Meloneras/SOMMEM/SOMMEM-20.pdf
Beаver, W. (1967). Finаnciаl Rаtios аs Predictors of Fаilure. The Journal of Аccountin Reseаrch, 5(4).
Begley, J., Ming, J., and Watts, S. (1996). Bankruptcy Classification Errors in the 1980s: An Empirical Analysis of Altman’s and Ohlson’s Models. Review of Accounting Studies, 1.
Bobileva, A.Z. (2004). Financial recovery of the company: theory and practice. Moscow: Delo.
Brigham, E.F., Ehrhardt, M. C., and Fox, R. (2016). Financial Managment: theory and practice. Hampshire: Cengage Learning EMEA.
Chesser, D.L. (1974). Predicting Loan Noncompliance. The Journal of Commercial Bank Lending, 56(12).
Chorаfаs, D.N. (2001). Liabilities, Liquidity, and Cash Management: Balancing Financial Risks. Canada: John Wiley & Sons, Inc.
Damodaran, A. (2009). Finding the Right Financing Mix: The Capital Structure Decision. New York: Stern School of Business.
Davydenko, N., Skrypnyk, Z., Titenko, O.V., Zhovnirenko, M. (2019). Modeling of the optimum level of financial provision of Ukrainian enterprises' innovative activities. Global Journal of Environmental Science and Management. Retrieved on March, 4, 2020, from: https://www.gjesm.net/article_35488.html
Fernandez, P. (2007). Company valuation methods. The most common errors in valuations. Social Science Research Network. Retrieved on March, 4, 2020, from: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=274973
Ferreira, S., Grammatikos, T., and Michala, D. (2016). Forecasting distress in Europe SME portfolios. Journal of Banking & Finance, 64,112–135. Retrieved on March, 4, 2020, from: http://dx.doi.org/10.2139/ssrn.2266426
Global M&A Outlook Unlocking value in a dynamic market (2019). J.P.Morgan, New York: J.P. Morgan’s M&A team, Jan. 2019. Retrieved on March, 4, 2020, from: https://www.jpmorgan.com/jpmpdf/1320746694177.pdf
Gordini, N. (2014). A genetic algorithm approach for SMEs bankruptcy prediction: Empirical evidence from Italy. Expert Systems with Applications, 41(14), 6433–6455. Retrieved on March, 4, 2020, from: http://dx.doi.org/10.1016/j.eswa. 2014.04.026
Henrih, and Voronova, I. (2009). Creation of internal credit risk assessment models. Proc. of the V (XVII) All-Ukrainian Scientific and Practical Conf. Kyiv: NTUU „KPI”, 12-15.
Kaetzler, B., Kordestani, K., and MacLean, Andy (2019). The secret ingredient of successful big deals: Organizational health. McKinsey Quarterly 2019. Retrieved on March, 4, 2020, from: https://www.mckinsey.com/business-functions/organization/our-insights/the-secret-ingredient-of-successful-big-deals-organizational-health
Korol, T. (2011). Multi-Criteria Early Warning System Against Enterprise Bankruptcy Risk. EuroJournals Publishing, 61, 143-145.
KPMG 2018 restructuring services (2018). Keeping pace with markets Retrieved on March, 4, 2020, from: https://assets.kpmg/content/dam/kpmg/ch/pdf/restructuring-services-broschure.pdf
Kropivšek, J., Perić, I., Pirc, A., Barčić, P., Grošelj, P., Motik, D., and Jošt, M. (2019). Long-term Financial Analysis of the Slovenian Wood Industry Using DEA. Drvna Industrija 70(1), 61-70. Retrieved on March, 4, 2020, from: http://dx.doi.org/ 10.5552/drvind.2019.1810
Lennox, C. (1999). Identifying Failing Companies: A Re-evaluation of the Logit-, Probit- and DA Approaches. Elsevier Science Inc.
Li, S., and Wang, S. (2014). A financial early warning logit model and its efficiency verification approach. Knowledge-Based Systems, 70, 78–87. Retrieved on March, 4, 2020, from: http://dx.doi.org/10.1016/j.knosys.2014.03.017
Lyudmyla Katan, Olena Dobrovolska and José Manuel Recio Espejo (2018). Structural modeling of the financial support for the Ukrainian agrarian sector. Investment Management and Financial Innovations, 15(3), 199-211. doi:10.21511/imfi.15(3).2018.17
Mаckevičius, J., Poškаite, D. (1998). Finansial аnаlysis. Vilnius: Kаtаliku pаsаulis.
Mager, F., Meyer-Fackler, M. (2017). Mergers and acquisitions in Germany: 1981–2010. Global Finance Journal, Elsevier, 34(C), 32-42.
Mavlutova, I. (2012). The Role of Business Restructuring in Financial Performance Enhancement. International Journal of Mathematics Models and Methods in Applied Sciences, 2(7), 166-173.
Mayr, S., and Lixl, D. (2019). Restructuring in SMEs – A multiple case study analysis, Journal of Small Business Strategy, 29(1), 85-98. Available: https://libjournals.mtsu.edu/index.php/jsbs/article/view/1183
Moreira, A., and Silva, P. (2019). Handbook of Research on Corporate Restructuring and Globalization. Hershey: IGI Global.
Needles, B.E. (2005). Finаnciаl & Mаnаgeriаl Аccounting: 7th ed. Boston: Houghton Mifflin Compаny.
Newton, G. (2003). Corporate Bankruptcy. Tools, Strаtegies аnd Аlternаtives. New Jersey: John Wiley & Sons, Inc.
Olaru, A., and Capatina, A. (2011). The analysis of performance control management system within Romanian IT companies/ Proc. 5th WSEAS International Conference on Busiess Administration (ICBA '11), Puerto Morelos, Mexico, 11-15 Retrieved on March, 4, 2020, from: http://www.wseas.us/e-library/conferences/2011/Mexico/ICBA/ICBA-01.pdf
Perevozova, I., Daliak, N., Babenko, V. (2019). Modeling of Financial Support for the Competitiveness of Employees in the Mining Industry. CEUR Workshop Proceedings, 2422, 444-454. Retrieved on March, 4, 2020, from: http://ceur-ws.org/Vol-2422/paper36.pdf
Perevozova, I., Babenko, V., Kondur, O., Krykhovetska, Z., and Daliak N. (2019). Financial support for the competitiveness of employees in the mining industry. SHS Web of Conferences, 65, 1-6. doi: https://doi.org/10.1051/shsconf/20196501001
Rashid, A., Naeem, N. (2017). Effects of mergers on corporate performance: An empirical evaluation using OLS and the empirical Bayesian methods, Borsa Istanbul Review, 17(1), 10-24.
Ross, S.A., Westerfield, R.W., and Jordan, B.D. (2012). Fundamentals of Corporate Finance. US: The McGraw Hill Companies.
Sedlaček, J., Valouch, P., and Konečny, A. (2011). Development Trends at Markets with Mergers and Acquisitions in 2001–2010, Proc. 2nd WSEAS International Conf. on FINANCES and ACCOUNTING”, Montreux, 106-112. Retriever on March, 3, 2020, from: http://www.wseas.us/elibrary/conferences/2011/Montreux/AMI/AMI-00.pdf
Sharpe, F.W. (2008). Capital Asset Pricing Model. Netherland: Value Based Management. Retrieved on March, 4, 2020, from: http://www.valuebasedmanagement.net/ methods_capm.html
Shkodina, I., Liegostaieva, O., and Kondratenko, N. (2019). Institutional transformations of the global financial system in technological revolution’s terms. The Journal of V.N. Karazin Kharkiv National University. Series "International Relations. Economics. Country Studies. Tourism”, 9, 35-41 doi: 10.26565/2310-9513-2019-9-04
Springаte, G. (1978). Predicting The Possibility of fаilure in а Cаnаdiаn Firm: А Discriminаnt Аnаlysis. Unpublished M.B.A. Research Project, Simon Fraser University.
Tаfler, R.J. (1984). Empiricаl models for the monitoring of UK corporаtions. Journаl of Bаnking аnd Finаnce, 8.
Thang, N. N (2014). Problems and Issues in Corporate Restructuring in the State-Owned Construction Sector in Vietnam: The Case of VINACONEX, Asian Social Science, 10(22). doi: http://dx.doi.org/ 10.5539/ass.v10n22p291
Venkat Gudivada, R. and Bullayya, L. (2017). The Influence of Business Restructuring in Public Sector Unit on the Relationship between Organizational Climate, Perceived Performance and Job Satisfaction. Academy of Strategic Management Journal, 16(2).
White, G., Sondhi, A., and Fried, D. (1994). The Аnаlysis аnd Use of Finаnciаl Stаtements. New York: John Wiley аnd Sons, Inc.
Zakirova, A.A., and Dubolazov, V.A. (2018). Restructuring of a legal entity by spin-off and creation of subsidiary enterprises as business development, St. Petersburg State Polytechnical University Journal. Economics, 11(2).101-108. Available: http://dx.doi.org/10.18721/JE.11210