Reorganizations During the Pandemic

April 21, 2020

A new type of coronavirus epidemic may also affect the timing of ongoing or planned company transformations and group-level structuring processes, but may even necessitate such reorganizations, according to a new study by Deloitte Hungary.

Fearing the consequences of the economic crisis, the question rightly arises for farmers: what tools do they have to maintain liquidity, reduce costs, recover quickly from the crisis and maintain business continuity?

The aim of the merger of the companies is most of the time to achieve the synergy effect, since operating as a company, the economical size of the plant can be achieved, the markets can expand, and the sales network can be more modern. Transformations and group-level reorganizations are typically based on business interests, but in all cases it is necessary to examine other legal, accounting and tax effects, as they also affect the company's results and capital position, in many cases helping to restore them.

In the event of a transformation of companies, the successor companies may decide to revalue their assets and liabilities shown in the balance sheet and include them in the balance sheet of the merger or division at market value. Even assets that have already been written off to zero but are in use, have a value and are marketable. The positive difference resulting from the revaluation (increase in assets) increases the equity of the successor, which provides an opportunity for companies in a loss-making situation due to the crisis to settle their equity.


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