Corporates need to keep subsidiary capital structures simple

Corporates have much to gain from getting their subsidiary capital structures right. The key to success could lie in reducing complexity and prioritizing debt.

Any large corporate doing business across borders faces the challenge of dispersed liquidity.

Done well, subsidiary capital structure optimization ensures that the corporate balance sheet is no larger than it needs to be and that that capital can be repatriated with minimal difficulty.

However, companies often pay insufficient attention to subsidiary capital structure optimization. By doing so, they jeopardize the visibility of liquid assets: too many standalone bank accounts and liquidity in multiple legal organizations without planned cash concentration obscures the overall picture.

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