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Divestiture is described as “a part or total disposal of an asset or a business entity through a sale, exchange, closure or a bankruptcy”. The management thinks of disposal of a unit or business entity because contribution of that unit or business entity is minimal or nothing.ReasonsThe reasons for divestiture are as follows −Heavy loss in units.Negative cash flows over a period of time.Unable to compete in the market.No technology up gradation.Difficult to integrate.Alternative for good investment.Legal problems.Less or minimum market share.TypesThe types of divestiture are as follows −Spin offs − Subsidiary company is created.Splits − Parent company is split ... Read More
Divestiture is also called as divestment which is used by corporations for disposal of their business unit with intention to focus on more profitable units. Some companies had difficulties in managing some of their business units, some going for growth trajectory are some of the reasons why companies use divestitures.Split-offs and splits-ups are methods used by corporations for their divestment.Split-offIn a split-off parent company splits some of their assets and forms a subsidiary company with their split assets. Shareholders of the parent company will have an opportunity to exchange shares (if they want) of the parent company to the newly ... Read More
Care-outs, split-offs, spin-offs and splits-ups are commonly used divestiture methods by corporations in order to maintain their portfolio strategy and to achieve their financial goals.Carve-outsCarve-out is the process of dividing the secondary company from its original or parent company. Dividing in the sense the secondary company is now a newly independent company and it has no shadow of its parent organization.Newly formed company has its own board of directors. In carve-outs shares of the parent company will be sold or distributed in initial public offering (IPO). They are not distributed to existing shareholders.AdvantagesThe advantages of carve outs are as follows ... Read More
Divestitures are commonly used words for effective management of company portfolio and to achieve financial goals. There are different methods in divestiture, commonly used are spin-offs, care-outs, split-offs and split-ups.Spin-offsIt is the term used for newly formed independent companies which are formed from parent companies. In these spin-offs the parent company sells their existing shares to its existing shareholders.AdvantagesThe advantages of spin-offs are as follows −Using spin-off methods companies can increase their profits. They can attract new shareholders.They can set and achieve their own goals by following their business models.Provides security to shareholders.Employees can explore their individuality and vision.Newly formed ... Read More
For effective management of their portfolio to achieve financial goals companies use various divestiture methods like spin-offs, split-ups, carve-outs and split offs. These are commonly used corporate actions to ensure potential growth of both business and shareholders wealth.Split-upsAs the name suggests, split-ups are nothing but company splitting of parent organizations into two or more independent or separate companies. Stocks of parent organizations may be traded for newly formed companies. There may be many reasons for split-ups, some of them are strategic decisions to recondition their operations, companies need different company lines, in terms of funds, resources etc.Investors can take advantage ... Read More
Business faces some challenges and they need various plans to improve their financial conditions. Challenges may relate to cash, less profits, debts etc. to improve their financial conditions they need to sell their assets.Spin off and divestitures are two such procedures that help business. People sometimes confuse terms like selling and distributing but they differ with their objectives and principles.Spin offA new company is created by selling some of parent company shares is called spinoff. This newly formed company has its own management and rules and technical support will be given by the parent company, if needed.Based on the need ... Read More
Before going for a spinoff and split off. Let us get an idea about Divestiture. Divestiture is nothing but selling a part of a division to create a separate company or another company. It is called the process of divestment.Divestiture can be spin -off, split – off, split-up, equity carve – out etc. commonly used forms of divestiture are spin-off and split-off. Spin-off refers to business division, which becomes independent after separation. In the split off company holds some shares in the subsidiary.Spin-offSplit off is a type of divestiture where a part of the business is disjoined and creates a ... Read More
Before going for financial synergy, let us understand the word synergy which is commonly used in merger and acquisition. Synergy can be understood as, the combined value and performance of a merged company is always greater than the value and performance of individual companies (which are merged).Synergy can be formulated as below − Value of merged companies > value of individual companiesLet say two companies, X and Y are merged, now synergy can be formulated as$$\mathrm{Value\:of\:(X+Y)>\:Value\:of\:X\:+\:Vale\:of\:Y}$$In both, financing activities and operating activities synergies can arise the following −Financial synergy − Arises ... Read More
In this article, we will be learning about the twitter sentimental analysis. We will register for twitter oAuth API, install all the dependencies and finally write our sentimental analyzer script.An API(Application programming interface) is a gateway that allows you to access some servers(Twitter) internal functionality.The prerequisite is that we have a twitter account set up with verified phone number.After this, we visit the twitters website and tap on the create a new app icon. Now we fill all the credentials i.e. name and accept the developer agreement and finally click on create.Now our app is created , on the top ... Read More
Performance and value of a merged company in more than their individual value and performance is called synergy. Let us see the buyer’s perspective, it influences the maximum price they pay for the company. Let us see the seller’s perspective, favoring a higher purchase price. Important point to keep in mind is that synergies vary from one combination to another business.Revenue synergy results in generating more sales for a combined company (after merger) than the companies which are able to generate individually (before merger). If a company acquires another company (its competitor), then, both the companies can increase their client ... Read More