Corporate Restructuring Dynamics: A Case Study Analysis

Corporate restructuring has recently faced widespread criticism due to its low-turnaround success rate and the sharp increase in insolvency filings. Our analysis extends beyond this discussion by investigating the inherent complexity of restructurings as a critical success factor with a particular focus on portfolio restructuring. Based on theoretical findings, we develop a System Dynamics model for a case study in portfolio restructuring. Thereafter, we evaluate this research approach in an outlined context and devise a roadmap for subsequent research. Results of the analysis indicate that the restructuring process can be reasonably simplified with a System Dynamics model. Further, this model enables a comprehensive sensitivity analysis that allows management to develop an understanding of the underlying dynamics. The key implication is that managers should consider a System Dynamics model as a complement to conventional modeling, as the conceptual and numerical benefits can outweigh the related costs.