Business Turnaround vs Business Restructuring – What’s the Difference?
Turnaround and restructuring are closely related concepts in business recovery, but they serve distinct purposes and occur at different stages of corporate distress.
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A turnaround refers to the broader process of restoring a struggling business to profitability and stability. It encompasses both operational and strategic changes aimed at halting decline and improving performance. This may involve cost-cutting, boosting revenue, streamlining operations, changing leadership, or altering the business model. Turnaround efforts are typically initiated early, when there is still time to avoid formal insolvency proceedings. The focus is on reversing negative trends and returning the business to financial health.
Restructuring, by contrast, generally refers to a more formal process of reorganizing a company’s financial and/or operational structure to address insolvency, excessive debt, or legal risks. Financial restructuring may involve negotiating with creditors, refinancing debt, or entering voluntary administration or a small business restructuring process under the Corporations Act. Operational restructuring may include downsizing, divestment, or reorganizing internal departments.
In essence, turnaround is a proactive management response to poor performance, while restructuring is often a reactive legal or financial necessity. A successful turnaround may avoid the need for restructuring, but in more severe cases, restructuring becomes a vital part of the turnaround journey.
Turnaround Services We Provide
IRT Advisory offers a comprehensive suite of turnaround services designed to stabilise and revitalise underperforming or distressed businesses. These services begin with turnaround consulting, where our experienced advisors conduct a detailed assessment of the business’s financial, operational, and strategic position. The goal is to identify the root causes of decline and develop a tailored business turnaround plan to restore viability.
Key components of these services include operational turnaround strategies—such as improving cash flow, reducing costs, optimising supply chains, and enhancing productivity. These may be supported by changes in leadership, restructuring internal processes, or addressing governance issues. A strong focus is also placed on financial restructuring, including debt negotiations with creditors, informal arrangements, or formal options such as safe harbour protection, voluntary administration, or small business restructuring under the Corporations Act.
