Restructuring is the corporate management term for the act of reorganizing the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable, or better organized for its present needs. Other reasons for restructuring include a change of ownership or ownership structure, demerger, or a response to a crisis or major change in the business such as bankruptcy, repositioning, or buyout. Restructuring may also be described as corporate restructuring, debt restructuring and financial restructuring. Executives involved in restructuring often hire financial and legal advisors to assist in the transaction details and negotiation. It may also be done by a new CEO hired specifically to make the difficult and controversial decisions required to save or reposition the company. It generally involves financing debt, selling portions of the company to investors, and reorganizing or reducing operations. The basic nature of restructuring is a zero-sum game. Strategic restructuring reduces financial losses, simultaneously reducing tensions between creditors and equity holders, in order to facilitate a prompt resolution of a distressed situation. Corporate debt restructuring Corporate debt restructuring is the reorganization of companies' outstanding liabilities. It is generally a mechanism used by companies which are facing difficulties in repaying their debts. In the process of restructuring, the credit obligations are spread out over a longer period with smaller payments. This can better allow the company to meet its debt obligations. Also, as part of this process, some creditors may agree to exchange debt for some portion of equity. Working with companies in this way in a timely and transparent manner may go a long way to ensure their viability, which is sometimes threatened by internal and external factors. The restructuring process attempts to resolve the difficulties faced by a corporate body and enable it to become viable again. Steps: Ensure the company has enough liquidity to operate during implementation of a complete restructuring Produce accurate working capital forecasts Provide open and clear lines of communication with creditors who mostly control the company's ability to raise financing Update detailed business plan and considerations Valuations in restructuring In corporate restructuring, valuations are used as negotiating tools and more than third-party reviews designed for litigation avoidance. This distinction between negotiation and process is a difference between financial restructuring and corporate finance. From the point of view of transfer pricing requirements, restructuring may entail the need to pay the so-called exit fee (exit