Obsolete, dormant, or otherwise badly performing parts of a business can have a hugely negative impact on a company’s overall profitability. Outdated group structures affect all types of businesses, but are most commonly seen in long-established companies or those which have acquired or merged with other businesses over time.
Even in smaller companies, once successful areas can quickly become non-performing due to changing or challenging market conditions which can have a rapidly negative impact on your bottom line. Strategically closing or eliminating these elements of a company can help to not only cut costs, but also to tighten up corporate governance and limit areas of non-compliance.
Corporate simplification typically involves eliminating one or more companies from a larger group, or removing layers from a complex corporate structure. On a financial level, this can release tied up capital and allow for future funds to be diverted towards improving and enhancing more profitable areas of the business. Huge benefits can also be seen with regards to risk management.
Poorly organised businesses can be a massive drain not only on company finances, but also company resources due to the burden of ongoing administrative duties, such as tax returns and audits, which must be completed regardless of whether the company is actively trading or not. Areas which are not trading naturally have less attention directed towards them making them weak spots for non-compliance particularly in an environment of ever-changing regulation.
Corporate simplification is rarely simple, and areas of non-performance are not always obvious particularly in more complex group structures. RBR Advisory’s team of experienced turnaround specialists can identify these areas of non-performance and suggest ways of cutting costs and reducing the financial burden of underperforming assets, delivering both long and short term benefits.
Sound planning is vital when considering undertaking a structured reorganisation to ensure distributions are maximised, liabilities adequately dealt with, and to allow for a seamless transition to take place. Carefully management throughout the process is vital and extensive due diligence must be performed to ascertain the knock-on effects to other areas of the business before closing down any aspect of a company. Our team of experts provide a comprehensive service beginning with the identification of potential areas ripe for simplification, through to executing a robust plan, resulting in a more streamlined corporate structure.
Depending on the structure and the level of assets involved, obsolete parts of the company can be brought to a close tax-efficiently through a Members’ Voluntary Liquidation (MVL) or alternatively dissolved following a controlled wind down. Whether dealing with multinational PLCs or smaller owner-managed businesses, we can help improve your corporate governance, lessening administrative costs and overheads in the process.