Decline or Growth: Corporate Restructuring Can Save Your Business

Markets are constantly evolving, and the past few years have shown just how unpredictable they can be. Economic volatility brings both risks and opportunities for businesses across the industries that power the UK economy.

For many companies, harsh conditions, including rising production costs, shrinking demand, intense competition, and a tighter credit environment, have put profitability under pressure. Cash flow challenges and reduced margins have pushed some firms to the brink of insolvency. At the same time, businesses in growth industries such as e-commerce, renewable energy, artificial intelligence, and social sciences are facing a different challenge: scaling quickly enough to keep up with demand. In both scenarios, financial instability is a frequent by-product of market volatility.

Corporate restructuring can be the solution. Whether your business is declining or stretched by rapid expansion, restructuring can restore stability, improve efficiency, and help steer the company back towards profitability.

This article examines the concept of corporate restructuring, its necessity, and how businesses can finance restructuring efforts to foster resilience and long-term success in turbulent times.

What is corporate restructuring?

Corporate restructuring refers to the process of reorganising a company’s operations, management, or financial structure to improve performance. It can help a business reduce costs, streamline processes, raise cash, and position itself for sustainable growth.

A successful restructuring plan can help a company to:

• Increase productivity
• Enhance the quality of products and services
• Reduce operating costs
• Raise urgently needed cash
• Cut debt levels and improve profitability
• Stabilise day-to-day operations
• Better serve customers and shareholders
• Strengthen competitiveness and attract new investment or buyers

Why do businesses restructure?

There are many reasons why a business may pursue restructuring. The most common is financial distress, when a company struggles to pay debts, has declining revenues, or is no longer competitive. But restructuring is not always a sign of weakness — it can also support growth or repositioning.

Insolvency and administration

In the UK, companies in severe financial difficulty may enter formal insolvency procedures such as administration. This provides breathing space from creditors while directors and advisers work to restructure operations and negotiate with lenders. A viable business may emerge leaner and stronger, with debts reduced and operations stabilised.

Restructuring plans in these scenarios often require external funding, sometimes secured through debtor-in-possession-style financing or specialist turnaround funding from alternative lenders. Access to fast, flexible finance can make the difference between recovery and closure.

Strategic repositioning

Some companies restructure to adapt to changing markets. For example, a business may shift its focus to new industries or reorganise its operating model to remain competitive. By decentralising decision-making and creating leaner structures, organisations can reduce overheads and improve agility.

A real-world example is a Brazilian cosmetics group, which recently restructured to devolve authority to individual brands. This cut costs by up to 40% and positioned the company for stronger performance later in the year. UK firms in retail and consumer goods have taken similar steps in response to falling sales and changing consumer behaviour.

Revenue decline and cash flow shortages

Falling revenues and tightening cash flow are triggers for restructuring. Even market leaders can be vulnerable when competition intensifies. For example, a global leader in subscription-based streaming services restructured its film division, streamlined leadership, and adapted its business model to include advertising-tier subscriptions. These measures restored growth and helped the company regain market confidence.

UK businesses across manufacturing, hospitality, and professional services have faced similar challenges, using restructuring to cut costs, adjust product offerings, and stabilise cash flow.

Rapid growth

Restructuring is not always about saving a company from collapse. Sometimes, rapid growth can stretch financial, management, and operational resources to breaking point. Restructuring allows a company to scale efficiently, align resources with demand, and protect profitability.

A notable example is a diversified global entertainment, media, and experiences conglomerate, which reorganised in 2023 into core divisions. By streamlining operations, this organisation increased efficiency and delivered double-digit profit growth. UK tech firms and high-growth start-ups often face similar inflection points, requiring structural changes to keep pace with expansion.

Mergers and acquisitions

Mergers and acquisitions (M&A) often create the need for restructuring. Combining two companies inevitably produces duplication in functions, systems, and staff. Successful integration requires careful restructuring to align strategies, reduce costs, and realise the full benefits that justified the deal in the first place.

Funding corporate restructuring

Restructuring is not just about leadership and strategy. It also requires funding — and often significant amounts of it. Unfortunately, businesses undergoing restructuring are typically unable to secure traditional bank loans. With mainstream lenders continuing to tighten credit standards, companies with declining performance or weak balance sheets struggle to access the working capital they need.

This is where alternative finance comes in. Specialist lenders can provide faster, more flexible funding options tailored to the needs of distressed or rapidly growing businesses.

Five ways alternative finance supports restructuring

1. Faster approval processes
   Alternative lenders assess funding primarily on the strength of assets and collateral, rather than historic credit scores. Approvals can be granted within days or weeks, compared to the months it may take a high-street bank. Once agreements are signed, onboarding and initial funding can be completed quickly — essential in restructuring scenarios.
2. Invoice finance for cash flow stability
   Invoice finance or invoice discounting provides immediate cash by releasing funds tied up in unpaid invoices. By selling receivables to a finance provider, businesses can access up to 90% (minus a small fee) of invoice value within 24 hours. The balance owing is transferred to the business when the invoice is paid in full to the lender. This improves liquidity, smooths cash flow, and avoids taking on additional debt — making it one of the most flexible tools for companies in transition.
3. Asset-based lending for large-scale investment
   For businesses needing significant restructuring capital, asset-based lending (ABL) can provide multi-million-pound facilities secured against receivables, inventory, or equipment. Leading alternative lenders can advance facilities of up to £6m or more, providing the capital needed for operational overhauls, acquisitions, or major strategic shifts.
4. Scalable funding limits
   Unlike traditional bank loans with fixed ceilings, alternative finance facilities can scale alongside the business. For instance, invoice finance limits increase automatically as more invoices are generated. This flexibility ensures funding keeps pace with recovery or growth, without the need for repeated renegotiations.
5. Sector expertise and hands-on support
   Many alternative lenders specialise in restructuring finance, employing experienced teams who understand the complexities of turnarounds and growth challenges. This expertise, combined with tailored financial products, ensures companies receive not only funding but also guidance on managing change.

Conclusion

With economic conditions remaining uncertain, businesses across the UK face mounting pressure to remain viable. Some are battling declining revenues and insolvency risks, while others are straining to keep pace with demand.

Restructuring offers a pathway to recovery or sustainable growth. For struggling companies, it can stabilise operations, reduce debt, and restore profitability. For expanding businesses, it provides the structure needed to scale efficiently.

Funding remains the critical enabler of successful restructuring. Traditional lenders often retreat during times of stress, but alternative finance providers are stepping in to fill the gap. With faster approvals, scalable facilities, and asset-backed lending solutions, they offer the financial flexibility businesses need to navigate change.

For companies facing decline or rapid growth, restructuring may be the turning point that saves the business. By engaging professional advisers and partnering with an experienced alternative lender, firms can access the tools, funding, and expertise required to survive uncertainty and position themselves for long-term success.

Key Takeaways

• UK businesses face volatile conditions — from insolvency threats to the challenges of scaling rapidly.
• Corporate restructuring reorganises operations, finances, and management to restore stability and efficiency.
• Triggers for restructuring include insolvency, falling revenues, rapid growth, M&A, and strategic repositioning.
• Traditional bank funding is difficult to secure during restructuring.
• Alternative finance offers faster approvals, scalable facilities, and sector expertise to fund restructuring successfully.