Location and Restructuring Concept for an MDAX Group’s Equity Investment

It is frequently necessary to restructure equity investments or group subsidiaries in financial difficulties. These companies are often independent legal entities. However, in most cases the level of integration between the parent group and the equity investment or the subsidiary is such that a group liability obligation applies. This means that some restructuring approaches (such as insolvency) are not possible.

Instead, it will be necessary to achieve a turnaround by means of the entity’s reorganization, cost-cutting measures and the realignment of its business. While the group is authorized to instruct the entity in question, it is solely the management of the equity investment or the subsidiary which is responsible for putting measures into practice. This is particularly so for measures of legal significance, such as in the areas of contract or personnel law. For these reasons, a restructuring concept cannot be executed with the group’s management alone and must, above all, be coordinated and implemented together with the subsidiary’s management.

The client’s division is an international leader in the field of large-scale industrial plants and their components. The department placing the order is responsible for the construction of chemical plants. A few years ago, a company which manufactures polycondensation plants was acquired with the goal of a further expansion of the group’s business. This subsidiary provides engineering and plant solutions for the packaging and textile industries worldwide. The subsidiary expected to make a loss on account of the strong level of competition in Asia, the political situation in Turkey (a core market), and a temporary drop in demand due to the end of a technology cycle. Haselhorst Associates was tasked with the preparation of a restructuring concept and with reviewing potential options for the consolidation of the company’s two European locations.