Many businesses in today’s global economy operate in multiple countries. They have expanded into new jurisdictions to get access to new markets and local talent that understands those markets. Many are backed by private equity or other investors, and have expanded rapidly for strategic reasons.
Almost all of these dynamic growth organisations have one thing in common: change. Many of them fail to manage the consequences of that change, leaving them with cumbersome, inefficient and costly structures.
The entity rationalisation solution
The first step to containing costs and streamlining an organisation’s structure is to take stock of all its entities in a process called legal entity rationalisation. There is no universal definition of entity rationalisation, but generally speaking it involves a thorough review of a corporate group’s structure to save costs and/or create efficiencies.
A legal entity rationalisation typically includes removing unnecessary entities from corporate structures, especially those that cost a lot but provide little value. In many cases, these entities have been acquired over time, for example through a buy and build program, and simply no longer fulfil their original purposes.
A rationalisation can also involve a host of other reviews and actions, such as changing or reducing an organisation’s workforce, streamlining its operational structure, and improving intragroup cash flows and other arrangements.
Vistra specialises in helping companies conduct legal entity rationalisations. We know that in an era of unprecedented competition and economic headwinds, every company needs to promote efficiencies and reduce risks. Rationalisations can play an essential role in these efforts and put your organisation in an optimal position to thrive.
To help you better understand the process of legal entity rationalisations, we’ve gathered some resources here. The links below are to authoritative content from our experts and to guides that describe our specific rationalisation-related services. If you have any questions about the process or our services, contact us and we’ll put you in touch with an expert.
Total entity management
Conducting a legal entity rationalisation is an important step for any growing organisation that hopes to stay competitive, including portfolio companies looking to increase their valuations. The concept of rationalisations — or simply conducting reviews to uncover inefficiencies and risks — can and should be applied to all areas of an organisation, from HR to immigration to tax to accounting.
Vistra can help you effectively implement this holistic approach, which we call total entity management. Not only can we review all your entities to determine if they’re fit for purpose, we can tell you how to bring non-compliant entities into line with local tax, HR and other obligations.
Once you’re compliant, our experts will make sure you stay that way, in all your countries of operation. The process is facilitated by our secure technology platform, which gives you complete control over and insight into your international operations.