How does corporate reorganization occur in an M&A process?

2023/11/28

Posted by 3Capital Partners

When a company acquires or joins another, there is a need to create a new composition in the corporate structure, after all, we are talking about organizations that now have new shareholders and management that will inevitably need to undergo reformulations.

In addition to mergers and acquisitions, corporate reorganization in companies also occurs for other reasons and for different strategic purposes. Continue reading the article and find out more.

What is a corporate reorganization?

Conceptually, corporate reorganization means an adjustment to the company’s shareholding structure and is a very common procedure in the corporate market, especially if we take into account the constant need for adaptation that companies need to undergo.

It is practically impossible for the company model chosen when opening a business to last throughout its operation, whether for strategic, tax reasons, entry of new partners or aspects of market strengthening.

But corporate reorganization is not just related to a change in the shareholders who hold control. It also refers to changes in the chosen company regime – such as the migration from a Limited Company to a Public Limited Company, for example.

What are the main reasons that lead to a corporate reorganization?

Any and all restructuring processes in a company require planning, consideration and assertiveness. When we talk about corporate reorganization, it is no different: regardless of the motivating reason, it is important to know the right time and follow all the steps in an orderly manner.

One of the situations in which this reformulation is considered is linked to tax issues, when the organization finds that modifying the taxation regime can result in real savings in paying taxes.

In other cases, corporate reorganization becomes a possibility when two companies come together in search of improving operational efficiency, ensuring a greater competitive advantage, expanding market power and diversifying revenue sources.

During the operation of a company, it is also common for there to be changes in membership, which, in itself, also demands reconfigurations to adapt the corporate type, taking into account the shareholders who join or end their ties with the business.

How many types of corporate reorganization are there?

As has been observed so far, there are several reasons that lead to a corporate restructuring, therefore, there are more than one way for it to occur in a company.

This reorganization can be done through a merger or acquisition, when the companies involved in the m&a operation cease their activities and form a new CNPJ.

In this type of situation, the new corporate structure becomes the holder of the assets and also the liabilities of the organizations participating in the transaction. It is essential that the redesign of the shareholding composition meets legal requirements and is submitted for approval by the appropriate regulatory bodies.

Another modality occurs when there is a change in a company’s corporate model, which we call Transformation. Despite this modification, the assets and partners remain unchanged.

When a company makes a total or partial transaction of its assets to another, we have a classic example of another form of corporate realization:split.

There is also a format whose name says it all: the incorporation.In this case, there is a complete absorption of one company by another, with the extinction of the organization that was incorporated and the aggregation of assets and assets.

Corporate reorganization in mergers and acquisitions: look for the right partners.

M&A operations are complex and require detailed monitoring at each stage, from the search for the best opportunities to the integration process carried out post-acquisition – when corporate reorganization is necessary.

Count on the advice of companies such as 3capital It will help you at every moment, reduce risks and make the completion of the business much safer on all fronts.