In a corporate environment of competing priorities, internal restructuring projects such as legal entity rationalisation (LER), business integration, managed wind-down, and country exits are often seen as “nice to haves”.
As a result of this lack of prioritisation internal restructuring projects often start off with great drive but soon slip behind schedule or stop completely. These projects, initiated with great ambition, end up meandering through their lifecycle or achieving far less value than originally envisaged with “success” being declared far too early.
Insight: Whilst delivering a legal entity rationalisation program, we became bystanders to a separate parallel project which set out to change the corporate entity names of 250 legal entities following a large-scale merger. The underlying objective was to align corporate entity names so that the group had one face to the market. Very shortly after project initiation, it was deemed that trading companies were too difficult to change and subsequently taken out of scope. Twelve chaotic months later, the project team declared success off the back of changing only 102 holding/dormant company names! The brief had been completely missed and the deliverable had in fact resulted in more complexity for the group having been left in a half-way house scenario.
This does not have to happen! In this article, we explore 5 key internal restructuring project accelerators which, in the right blend, will ensure your next initiative delivers real value.
Having a fit for purpose governance structure is essential to accelerate project delivery.
Firstly, set out the team structure with roles and names against those roles. Avoid any ambiguity as to who is responsible for what.
Secondly, set up governance forums specifically for your project (e.g. Steering Committees). Avoid starting a project that will be swallowed up by larger restructuring initiatives. Don’t become an “AOB” item before you have even started!
Internal restructuring projects rarely fit neatly into one particular function or business area, making it difficult to identify project ownership, responsibility and accountability. But these matters, identified through a strong governance structure, are essential to project success. It is paramount to obtain up front “buy-in” and key to this will be identification of a central, suitably senior Sponsor.
Early Sponsorship at the right level will help to raise the profile of any restructuring initiative. Promote the program if you can, for example through internal newsletters, intranet announcements, and even office “artwork”.
Insight: A previous client clad the office wall with a group structure chart and ceremoniously struck through legal entities as and when they entered liquidation – it became a Friday afternoon tradition which kept the project front of mind for the entire Finance function whether they were involved in the program or not.
Prepare a Project Charter or Project Initiation Document at the outset of the project. These standard project management tools ensure that objectives and governance structures are clearly set and agreed to by all impacted stakeholders at the start of a project. Strong Project Charters and PIDs can also serve as briefing documents for other teams and strong reference points throughout delivery.
Keep it proportionate –> not every project needs a 40-page Project Initiation Document that no one (except you) is ever going to read and very few projects need daily stand-up meetings to discuss micro-step plans. Over-saturate your key stakeholders and be prepared to lose momentum quickly as stakeholders start to move your priorities to the edge of their desks as they return to the comfort zone of their daily business as usual activities instead.
An internal restructuring project will require input from stakeholders across the business – we often describe legal entity rationalisation projects as “a mile wide and an inch deep”.
A strong governance structure will enforce a sense of ownership, accountability and responsibility by functions outside of the central project team, which should keep the restructuring in focus, providing impetus and acceleration.
A key role of the project sponsor role will be to identify and assign responsibility to suitable functional/ business leads to deliver. In turn, this responsibility should be cascaded down through functional teams/ towers (CFO –> Regional Finance Lead –> Local Finance Lead….) to secure full functional buy-in. Note that this is a cascade of responsibility, not a transference of responsibility.
By cascade, we mean a sharing or distributing responsibility to get the work done with two-way communication retained within each functional tower structure. Keeping the communication channel active within each functional tower will keep the project in focus and should avoid deceleration of deliverables.
A good way to accelerate through securing a sense of ownership, accountability and responsibility is to include project delivery on staff performance “scorecards”.
Whilst it may be your priority, an internal restructuring project is likely to be one of several activities on the agenda of your stakeholders.
Understanding competing activities is part of the planning process and essential to drive a sense of ownership and teaming whilst also adding momentum and acceleration. The delivery personnel required for internal restructuring activities are often those ‘on the ground’ in localised roles. Consulting with these stakeholders while creating the delivery roadmap helps understand resource availability, specific down-time periods (e.g. month / quarter-end), interdependencies, other in-flight programs and their potential impact on your project timeline. This will ensure a fully planned delivery roadmap that is set up to succeed, not to systematically slip.
By contrast, projects which overly dictate activities, timelines and milestones risk alienation of the very functions you need to support delivery.
Insight: We were asked by a Fortune 500 client to run a scoping piece of work to review 8 jurisdictions that had been identified as having significant duplication. The client insisted they would line up the internal stakeholders for us to face off to. On delivering our recommendation and identifying 6 trading companies for integration, we were met with significant resistance from the European Financial Controller who had not been consulted by our client prior to developing the delivery roadmap. The result? Hundreds of wasted hours and significant cost spent on a project that never got out of the starting blocks.
A balance is required between consulting stakeholders and being led by their competing view – the more stakeholders a project team consults with when developing the delivery roadmap, the higher the project resistance. You cannot please everyone – be clear with consultation objectives and avoid the risk of derailment by keeping discussions focused on “how” we do it, not “why” we are doing it.
Internal restructuring activities are often far more complex than initially perceived, especially by senior management. They require specialist resources who are used to changing directions, can be flexible in approach and, crucially, are experienced not only in program management but also the key requirements of restructuring advisory.
Make someone responsible for delivery of your internal restructuring project. A project lead and central project team, unencumbered by other activities, and with a sole focus on delivery, will significantly accelerate any program. A good restructuring project lead will bring experience, tried and tested tools, methodologies and practises to deliver your required outcomes your project and act as an early warning beacon in identifying key interdependencies to avoid or manage to keep progress on track.
Do not underestimate the art of project management.
Restructuring programs often test the boundaries of internal policy. When executing a Legal Entity Rationalisation program, existing policy frameworks that are more commonly in place for larger scale restructurings/ divestitures/ M&A activity are often not fit for purpose.
Insight: One of our clients had a policy framework in place that required all global functional heads and group CFO sign off before eliminating any legal entities – this included solvent, £2 balance sheet entities which had never done a day of trade in their existence! This was clearly overkill and required a Delegation of Authority process in order to alleviate the burdensome approval requirement and accelerate the transition from the approval phase to the execution phase. We helped our client to get that DoA in place and expedite execution activity.
Aside from streamlining the internal approval process, other risk tolerance accelerators could include:
In a corporate environment of competing priorities, internal restructuring projects such as legal entity rationalization, business integration, and country exits are often deprioritized. As a result, these projects frequently lose momentum or fail to deliver their intended value. Don’t let this happen to your next restructuring project. Ask JC Consulting Partners how we can help deliver these five key accelerators to ensure successful and timely restructuring:
JC Consulting provides restructuring advisory and project delivery services. Our restructuring advisory expertise is combined with core principles of project management to drive projects forward in a controlled environment – it is what sets us apart from other advisors.
We often embed ourselves in our clients’ teams in order to become familiar with their business, practices and people to help drive the results required.
Based in the UK, we also have a presence in Europe and Australia, enabling us to meet the needs of our global clients.
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