Tuesday, 16 November 2021

Is it time for a spring clean?

The to-do list is often long, and one task that never quite makes it to the top is a review and wind up of surplus or dormant subsidiaries. With the first half of the financial year almost done, now is the time to be considering ways to create a more transparent, less complex corporate structure through corporate streamlining.

It is a cost-effective restructuring tool that takes the complication out of a corporate structure, allowing for the solvent wind down of redundant entities. The need for these services can arise from M&A transactions (following either integration or separation), restructuring activity, discontinued operations, shareholder or partner disputes or inefficiencies with a legacy structure.

Businesses often side-step corporate streamlining for a variety of reasons, including:
  • A general lack of understanding of the process – the cost, the value, where to start and what is involved.
  • Streamlining may not be seen as a priority – the liquidation or deregistration of a corporate entity already generates a long to-do list, so corporate streamlining is often close to the bottom (if on the list at all).
  • Fear of the unknown – with businesses unsure of what issues will be uncovered through the process.
In our experience, however, there are several benefits. It cannot be understated that corporate streamlining creates a transparent and less complex corporate structure, ready for future growth. The process supports risk management, providing certainty that assets have been distributed and liabilities dealt with, and governance through increased transparency across the corporate group. Reductions in administration and compliance expenditure save both time and money, and businesses can counteract the negative stigma often associated with insolvency.

Like a good spring clean, corporate streamlining requires preparation, the right tools and coordination. Detailed planning at the pre-liquidation review phase and collaboration, with general counsel, in-house M&A teams and external legal advisers, are key elements of a simple, efficient and cost-effective corporate simplification process.

To find out more, contact our Corporate Streamlining specialists, Kate Conneely and Andrew Knight.