Article Categories
- All Categories
-
Data Structure
-
Networking
-
RDBMS
-
Operating System
-
Java
-
MS Excel
-
iOS
-
HTML
-
CSS
-
Android
-
Python
-
C Programming
-
C++
-
C#
-
MongoDB
-
MySQL
-
Javascript
-
PHP
-
Economics & Finance
Articles by Nagasravan Tamma
Page 8 of 27
What is the concept of Divestiture?
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 MoreWhat are the difference between split ups and split offs?
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 MoreWhat are the differences between split offs and carve outs?
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 MoreWhat are the differences between split ups and carve outs?
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 MoreWhat are the differences between spin off and divestiture?
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 MoreWhat are the differences between spinoff and split off?
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 MoreWhat is synergy in merger and acquisitions?
Concept of synergy is that the performance and value of combined companies is greater than individual performance and value. Merger is called synergy merger, if companies merge to create higher efficiency.Factors which contribute to the synergy are revenue, technology, cost reduction and talent. Synergy can also be done in products by cross selling the new products to increase their revenues. Sometimes, synergy can adversely affect, if the merger is poorly executed and has over optimism.TypesThe types of synergies are explained below −Revenue synergy − In this synergy, the companies will go for merger and acquisition to increase their sales by ...
Read MoreWhat are the differences between trade secret and patent?
Intellectual property comprises patents, trade secrets, trademarks and copyrights. In this we see about patents and trade secrets. Though both the words have a lot in common with new ideas, innovativeness etc. They differ from each other in some aspects like patent information can be shared where trade secret information can’t be shared. There are many more. In this we see the overview of both and their differences.PatentThe original author or the person who registered first will get an exclusive right for a limited period of time on claimed matter. Patents act as a shield to the author, it prevents ...
Read MoreWhat are the differences between patent and trademark?
The term intellectual property tells about different types of legal rights. The word intellectual property covers different areas like trademarks, copyright, design and patents. Though all the four look the same or used in the same context (in general), every word differs from another in many ways.In this let us see the overview and differences between patent and trademark.PatentPatent is a legal right granted by respective government authorities to the original owner or author who applied first. This right is useful from others in making, using, selling for a timeframe. To get this right the author has to register with ...
Read MoreExplain discounted cash flow analysis in merger and acquisitions
Discounted cash flow (DCF) analysis tells about the present value of an asset/company, based on the money, which it can make in future. This analysis will estimate the intrinsic value of a company.Current and future performances of a company are taken into consideration. Both inflow and outflow cash flows are discounted to the present value and sum of all the present values of future cash flows are equal to the net present value.CategoriesThe categories of discounted cash flow (DCF) are explained below −Internal forces − Considered as solid data, because raw information (quantitative) is used. Information includes historical performances, current ...
Read More