Recent restructuring deals have taken center stage, showcasing how businesses are adeptly navigating financial challenges. Corporate restructuring is being leveraged like never before to streamline operations, reduce debt, and pivot towards more profitable avenues. Uncover the most notable recent restructuring deals of 2024 and discover how these companies are reinventing themselves.
Notable Recent Restructuring Deals in 2024
Here are notable recent restructuring deals in 2024:
Diamond Sports Group, Inc – Transaction Date: March 2024
The largest sports network owner filed for bankruptcy to manage its mounting debt and as a navigation effort to transverse the evolving media landscape. The restructuring plan calls for operational streamlining, favorable debt restructuring, and renegotiation of current broadcast rights agreements.
Bed Bath & Beyond – Transaction Date: March 2024
Bed Bath & Beyond, the once-dominant player in the bathing soaps, lotions, and household and bathing peripherals sector, filed for Chapter 11 protection because of disappearing revenue and increasing debt. The firm submitted a restructuring plan to the court crafted to return to profitability by improving operational efficiency through the closing of underperforming stores, reducing their current debt load, and focusing on their more promising e-commerce platform.
Lordstown Motors – Transaction Date: June 2024
The electric vehicle manufacturer filed for bankruptcy to address its fiscal instability precipitated by production challenges. Lordstown’s restructuring plan is to seek out new strategic partnerships, obtain additional funding, renegotiate current debt obligations, and resume vehicle production.
Party City – Transaction Date: January 2024
Party City is the largest US-integrated retailer of party supplies. Like most recent restructuring deals, the firm filed for bankruptcy because of declining sales and high debt levels. Their restructuring plan is predicated on unprofitable store closures and a renewed focus on wholesale distribution channels and e-commerce as business revitalization catalysts.
Serta Simmons Bedding – Transaction Date: January 2024
Deteriorating financial performance and escalating debt forced the mattress and bedding peripherals company to seek bankruptcy protection. The restructuring plan enhances operational efficiency through debt reduction and increased R&D (research and development) investment in product innovation designed to increase market share.
What are Restructuring Deals?
Restructuring deals are strategic organizational strategies companies employ to address and resolve operational, finance, and market condition issues. These corporate-driven events produce significant operations and capital structure changes with the overarching goal of improving efficiency, stability, and ultimately profitability. Here are the benefits of recent restructuring deals:
Survival Growth – A distressed firm’s restructuring can be a gateway to the return of growth, and profitability, both necessary survival cornerstones.
Improved Financial Health – Companies can stabilize their capital structure by improving cash flow and reducing their debt.
Operational Efficiency – Streamlined restructuring of operations can yield more efficient capital allocation and increase advantageous cost cutting.
Strategic Realignment – Restructuring allows companies to divest non–core and/or under-performing assets and realign focus on their core strengths.
What is the Difference between Restructuring and M&A?
Restructuring and Merger and Acquisitions (M&A) differ in purpose, nature of change, outcome, and shareholder involvement. Here’s what I mean:
Purpose
Restructuring – As a response to financial distress, firms initiate restructuring to improve fiscal health and operational efficiencies.
M&A – A company’s aim in pursuing an M&A strategy is to grow through acquisition, enhance current products and services by augmenting or adding new ones, and solidify a durable competitive advantage through increased synergies.
Nature of Change
Restructuring – A company’s capital structure and operations undergo internal change.
M&A – Merger and acquisition change is an external event where companies combine, or one firm acquires another.
Outcome
Restructuring – Stabilizing and improving operational efficiency is the aim of restructuring.
M&A – The acquisition and integration of new companies and their product lines, market share, proprietary technology, and new resources and capabilities is the aim of M&A.
Shareholder Involvement
Restructuring – Restructuring facilitates existing creditor negotiations, shareholder compensation restructurings, and plan re-submittals to comply with court-mandated provisions.
M&A – M&A transactions involve purchase price and terms and conditions negotiations between the acquiring firm and the acquisition target. Negotiations usually extend to shareholders of both firms and any overseeing regulatory authorities.
These recent restructuring deals highlight various strategies companies employ to address financial distress, improve liquidity, and position themselves for future stability and growth.
Restructuring deals are complex and often involve significant negotiation and strategic planning. They require the involvement of various stakeholders, including management, creditors, shareholders, and sometimes regulators.
While both restructuring and M&A are strategic processes used by companies, restructuring focuses on internal improvements to financial and operational health, whereas M&A focuses on growth and expansion through external transactions.
