The impact of corporate restructuring: Mergers, divestments and MBOs

Abstract

On both sides of the Atlantic, corporate restructuring in its various forms has increased in intensity throughout the 1980s. After reviewing the relevant academic literature, this paper presents a detailed analysis of UK restructuring activity over the period 1980 to 1992. It provides new evidence which suggests that the different strategic restructuring options selected by managers may be linked at the macro (economy-wide) level. Although the strategic motives underpinning any particular restructuring transaction may be complex and varied, the paper concludes that companies may be at least partly responding to a common set of environmental/macro factors, a finding consistent with recent strategic models which indicate that economy-wide variables, such as deregulation of markets and increasing global competition, are associated with strategic change and corporate restructuring. The paper concludes with a discussion of the implications of the huge increase in corporate restructuring for management and employees.