The Benefits of Corporate Restructuring in Colombia

Corporate restructuring in Colombia involves studying and modifying your company’s operating systems and financial practices, with the aim of enhancing commercial performance and increasing profitability. By choosing to restructure your organization, you will be able to reduce its size or the size of under-performing elements, adapt to new business realities, improve management processes, better plan your local taxes in Colombia, and identify and mitigate looming risks before they grow to the point of affecting your interests.

Colombia has witnessed considerable growth over recent decades, with gross national product (GDP) growth never dropping below 2% since 2001, and hitting a total of $323.6 billion (all figures in USD) in 2019. Meanwhile, gross national income (GNI) — a key marker of prosperity — hit $6,510 per capita that same year, a figure that places Colombia as an upper-middle income country according to international standards.

Bordered by Brazil, Ecuador, Peru, Panama, and Venezuela, Colombia is only four hours by plane from the United States, and offers easy access to every major economy in Latin America, as well as to Asian markets via the Pacific Ocean. In addition, the South American nation has reached free trade agreements (FTAs) with 60 countries and is a founder member of the Pacific Alliance, a regional economic bloc that also includes Chile, Mexico, and Peru, and has ambitions to expand beyond the region.

Colombia has traditionally been one of the most popular destinations for foreign investment in Latin America, increasing its inflows of foreign direct investment (FDI) by 24% between 2018 and 2019, to reach $14.3 billion. Furthermore, Colombia became the third country from the region to join the Organization for Economic Cooperation and Development (OECD), after it was accepted in April 2019. Colombia’s main exports are crude oil, coffee, minerals, fruits and nuts, tress, and flowers.

If you are active in the Colombian market and you think you could benefit from an analysis and overhaul of your interests, read on to understand the advantages of performing corporate restructuring in Colombia. Or go ahead and contact us now for personalized assistance.

Getting to grips with corporate restructuring in Colombia

Corporate restructuring in Colombia involves a comprehensive analysis of your organization’s operating processes, finances, and personnel, with the intention of identifying inefficiencies, cost-saving opportunities, and liabilities or risks that could jeopardize your business in the future. The resulting suggested changes can cover a company’s financial or labor practices, organizational culture, management methods, or application of technology.

While it is common for companies facing choppy commercial waters to decide to conduct corporate restructuring, it is a way for organizations to adapt to an unexpected shift in the business environment, or simply to maximize their profits. The main types of corporate restructuring include:

Financial restructuring: is often conducted when a company has become unprofitable or sales have dropped considerably. In this case, the objective is focused on the payment of existing debts and the improvement of financial practices.

Organizational restructuring: involves a change in the internal structure of a company that can reduce its size or modify its hierarchical system, with the aim of making business operations more efficient.

Technological restructuring: implies the adoption of new technological trends to enhance commercial performance and improve the company’s commercial position before potential competitors.

Key advantages of restructuring your company

The key advantages associated with corporate restructuring in Colombia include:

Asset management: A corporate restructuring process in Colombia can help you identify profitable and unprofitable assets, allowing you to increase the capital of the company and use it to increase its productivity.

Cost reduction: When modifying the structure of your company, a central element will be a comprehensive process of identifying opportunities for cost reduction.

Process optimization: By carrying out a process of corporate restructuring, you will be able to identify and optimize the vital processes for the operation of the company, increasing the efficiency of the organization.

Business adaptation: A restructuring process can be a comprehensive way to adapt to a new business environment, because making that adaptation the focus of the restructure means that your company will be built to confront them.

Employee satisfaction: Generally a corporate restructuring will involve a review of the company’s working conditions and its relationship with staff. This will ultimately offer the company insight into staff welfare the opportunity to make improvements if needed.

Biz Latin Hub can help with corporate restructuring in Colombia

At Biz Latin Hub, our team of multilingual legal and tax specialists has extensive experience with corporate restructuring in Colombia. With our complete portfolio of market entry, HR, and back-office services, we can be your single point of contact to establish and maintain your commercial presence in Colombia, as well as in any of the other 15 countries across Latin America and the Caribbean where we are present.

Reach out to us now for personalized assistance or a free quote.

Learn more about our team and expert authors.