During the restructuring process, companies often operate under a “transition governance model” focused on crisis management rather than long-term strategy. This involves creating special board committees, appointing a Chief Restructuring Officer (CRO), and making other temporary leadership changes.
Once restructuring concludes, the transition model needs to evolve towards regular governance operations. Steps companies can take include:
With major changes to the business, governance documents need review and updates to align with the company’s new reality. Key areas to address include:
Mission and vision statements – If restructuring involved pivots to the business model, the company needs new mission and vision statements reflecting its go-forward focus. Revise these documents in alignment with the post-restructuring strategy.
Risk management policies – The risk profile of a restructured company looks very different. Review all risk management policies around areas like financial controls, compliance, credit extension, safety, and security. Update according to the new operating environment.
Compensation programs – With a recapitalized balance sheet and potentially new business lines, ensure incentive compensation programs align with desired behaviors and performance goals post-restructuring. Tie metrics to strategic priorities for the newly reorganized business.
Corporate bylaws – If restructuring resulted in a major change like converting from a public to a private company, review bylaws to ensure they provide appropriate governance for the new corporate structure.
While governance touches every aspect of company oversight, boards of post-restructuring companies need to prioritize a few critical areas:
With an overhauled capital structure and operating model, scrutiny of financial performance is vital. Boards should focus extensive attention on:
Post-restructuring, the stakeholder roster likely looks very different than before. New emphasis must be placed on active engagement and alignment. This includes more frequent touchpoints with:
Finally, boards have a critical role overseeing the executive team guiding the post-restructuring company:
Through a focus on financials, stakeholders, and leadership, boards can best position the company for a successful new chapter.
Given the complexity of governance post-restructuring, boards often benefit from engaging outside experts for advice and perspective:
By complementing internal governance capabilities with external expertise, boards can create a support network to provide guidance unique to the situation at hand.
Restructuring represents a transformational moment for companies. With major operational, financial, and leadership changes, approaches to governance need realignment to provide effective oversight for the reorganized business. By establishing a clear transition governance model, updating foundational governance documents, prioritizing critical focus areas, and leveraging outside experts, boards can structurally position the company for stability and success post-restructuring.
Please fill out the form below to receive a free consultation, we will respond to
your inquiry within 24-hours guaranteed.