The key facts for Capital Restructuring

1. Debt and Equity Balance

Capital restructuring typically includes adjusting a company’s debt-to-equity balance. A company might strive for a 60/40 debt-to-equity ratio to optimize its financial structure.

2. Effects on the Industry

Four major sectors are anticipated to encounter significant restructuring challenges: real estate and construction, retail, automotive and healthcare.

3. Government Support

Fiscal response to the COVID-19 crisis was three times larger than the response to the 2008–09 financial crisis (over $10 trillion among G-20 countries).

4. Increase in Restructuring

A survey by Deloitte reveals that 90% of restructuring experts anticipate a rise in restructuring activities over the next 12 months.

Capital restructuring entails adjusting the balance between debt and equity within a company’s capital framework. This strategic maneuver can be undertaken for several reasons, including enhancing profitability, addressing crises such as bankruptcy or hostile takeover attempts, or adapting to evolving market conditions. Timing plays a critical role in capital restructuring decisions. Let’s delve into the essential factors concerning the identification of restructuring needs and determining the optimal timing for their implementation: