We have organized hundreds (thousands?) of businesses from initial startups, to complex businesses requiring a significant number of companies. We create all the companies and define the operating relationships. We utilize every entity in the book, but primarily the big 4, partnership, LLC, S corp., C corp.
Sometimes businesses look up from day to day activities to suddenly realize, they are not structured well for their current business model. But that doesn’t happen as often as you might expect. More often, we go to them and advise them to reorganize to solve or avoid various problems. Those problems could be tax, efficiency, asset protection, international or interstate tax or to create or enhance competitive advantage. Some of our reorgs have been very complex, others have been relatively simply. But they all put the business in a better position to achieve success. We create all the companies and define the operating relationships.
“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.” (Wikipedia.)
To meet their full potential, 99% of successful businesses restructure at some point. It’a almost impossible to avoid. The structure selected at founding is seldom adequate for a thriving business.
Caterpillar is a good example. They regularly re-organize. I can’t help but wonder if more businesses would be more successful if they followed the Caterpillar example. This is not the first time Caterpillar as restructured.
GE is also restructuring. This isn’t their only bite at the apple, but this reorg may determine GE’s future.
Within the last month a client’s business was hit with a nuisance suit. They mounted a defense, which was just a knee jerk reaction. When they told me about it, I told the principals since their vital business assets were in another company, the company owned nothing worth incurring a lot of legal fees to defend. I advised them talk to their attorney about abandoning the company. He agreed. Problem solved. But had they been doing business under their previous structure, they would have been if for a long and expensive lawsuit.