Corporate restructuring in Peru can make your company more profitable and competitive by enhancing corporate management, introducing strategic business practices, and instituting longer-term operational and financial transformation.
With a gross domestic product (GDP) of $226.8 billion (USD) in 2019, Peru is Latin America’s sixth-largest market and one of the fastest-growing economies in the region. In 2019, Peru’s government launched the National Plan of Infrastructure for Competitiveness, which aims to improve the country’s infrastructure in terms of sanitation, health, and telecommunications. These measures are expected to promote foreign direct investment (FDI) in Peru, projected to reach $1.98 billion (USD) in 2021 and continue growing in 2022.
As companies try to adapt their operations to the new economic realities of a pandemic-struck world, corporate restructuring is one possibility, while seeking reputable tax advisory services in Peru also promises potential benefits.
Read on to find out what corporate restructuring in Peru means, what types of restructuring can be considered, and the advantages it offers.
What is corporate restructuring in Peru?
Corporate restructuring in Peru is the process in which a company undertakes comprehensive modifications of its organizational structure and business model to make the company more competitive and profitable. This process may involve significant changes in debt structuring, operations, technology, and management practices.
Some business owners believe that corporate restructuring is tied only to companies that are in financial dire straits, however, that is not always the case. Restructuring a company is often focused on profitability, solvency, and liquidity, but can also be used to improve reputation and competitiveness, or simply to adapt to new realities in the market.
Corporate restructuring is a complex process that demands ongoing monitoring and assessment. It is therefore wise to engage with a local specialist to ensure that everything is being done in the best possible way.
Types of corporate restructuring
Corporate restructuring entails some sort of transforming change to a company. Yet, there are different types of corporate restructuring in Peru, which include:
Internal restructuring: Intended to improve operational efficiency. This is done by analyzing the efficiency of interdepartmental communication and how assigned duties are carried out.
Technological restructuring: Focused on adapting to new technological trends and new sectoral advances. Digital transformation incorporating new technology is implemented to improve the commercial performance, often at a preemptive stage to prevent the organization from falling behind its competitors.
Financial restructuring: Undertaken to address debts and maximise assets. This is the most common type of corporate restructuring in Peru.
Advantages of carrying out a restructuring process
There are multiple advantages of corporate restructuring in Peru, such us:
Preservation of business assets: allows companies to identify and separate necessary assets from unprofitable or non-essential ones that could be sold.
Reduction of costs: examines the workforce, salaries, operational outgoings, and income to find ways to optimize a company’s operations and profitability.
Optimization of processes: involves the standardization of key processes and automatization of tasks to increase the company’s efficiency.
Adaptation to a new business model: aligns corporate management practices with the company’s targets. Additionally, it helps businesses to identify what modifications are needed.
Empowerment: involves developing job profiles to improve the corporate structure, which motivates employees to comply with the business strategy.
Why should a company undertake a company restructuring process?
Some of the most common causes for corporate restructuring are:
- Changes in consumption trends
- The entry of new competitors
- Loss of market positioning
- Negative financial results over an extended period
- Lack of business profitability
- An economic crisis in the sector
- A global economic crisis
Carry out a corporate restructuring process with the help of Biz Latin Hub
At Biz Latin Hub, our teams of multilingual accounting and taxation, and corporate law experts have broad experience in helping companies across Latin America undertaking corporate restructuring projects. With our full portfolio of market entry services, we are equipped to ensure the success of your commercial operations in the region. Contacts us now to receive personalized assistance.
Learn more about our team and expert authors and watch the following video to understand why you should invest in Peru: