Make it simple
More companies should aspire to a less complex corporate structure, which is easier both to operate and explain, suggests a magazine.
When growing through acquisitions, many corporations take on a a complex, unwieldy structure, which they then have to work around. Yet, according to an article in Global Banking and Finance (in turn picked up recently by Treasury Today), they are not deemed to stay that way.
Clear the garage
Rather, many of them could benefit from what the article calls a Corporate Structure Simplification exercise.
”The moral of this story is prioritise clearing out the garage on your “to do” list – identify where everything is, get rid of unnecessary clutter and put things where you want them. You’ll feel good about it, see the value in your achievement and be wary of letting it return to its previous state,” writes Global Banking and Finance.
Feels good afterwards
The magazine lists benefits by eight bullet points, including reduced compliance costs such as for tax and audit, reduced overhead, improved governance, releasing capital tied up in individual entities’ balance sheets, and aligning entity structure with operational activities.