Question

Discuss the three types of restructuring strategies and provide real-word examples of instances when each has been used. Cite any sources used to support your answer.

Answer 1

The three types of restructuring strategies are Downsizing, down scoping and leveraged buyouts.

Downsizing: Downsizing is reducing the number of company’s employees and sometimes also reduced the number of operating units. The composition of the businesses in the portfolio remains the same. For example, Snap chat downsized and laid off 100 engineers in 2018. It was 1/10^th of the total team and 3% of the 300 employees it had in 2017 December.

Down scoping: Downscoping refers to spinning off or divesting from or eliminating business not related to the core. Downscoping gives more positive benefits than downsizing. For example, Disney selling off Fairchild publications.

Leveraged Buyouts: A Leveraged buyout strategy is where a private equity firm or a party will acquire all firms' assets to make it a private firm. Once the assets are bought out by the private firm the company stocks cannot be publically traded. The party will acquire all the company’s assets and debts. for example in 2007 Black stone acquired Hilton hotels in a $ 26 billion leveraged buyout.

Reference:

• “11 companies that quietly downsized”
• “10 famous leveraged buyouts-Investopedia”