Deal structure is the binding agreement between companies, which outlines rights and obligations for both the companies. This agreement states about the entitlements and constraints of companies.In other words, deal structure is nothing but terms and conditions of a merger and acquisition. It prioritizes the objectives and the major priorities ... Read More

If the buyer wants to acquire stocks of the targeted company directly from selling to the shareholders, then that acquisition is called stock acquisition. In this, a buyer will get the ownership in both assets and liabilities of the business.In stock acquisition, the buyer sees a potential growth in a ... Read More

Asset purchase agreement is the agreement between buyer and seller of an asset. It states the terms and conditions related to the purchase and sale of an asset. The asset may be a plant and machinery, goodwill, stock etc.PrerequisitesThe prerequisites for an asset purchase agreement are as follows −Sale and ... Read More

If the buyer wants to purchase an operating asset instead of shares in a merger and acquisition transaction, then that deal is called an asset deal. An asset deal is not a form of acquisition. It comes under transfer of business units/assets.To complete the asset deal transaction, an asset purchase ... Read More

Disinvestments take place when the companies want to liquidate their stocks. If the companies want to change the rules by pressurizing the government or an industry, they will go for disinvestments, which also results in funds reduction.ProcedureThe procedure for a disinvestment in divestiture is as follows −Principle consent by administrative ... Read More

Equity carve out is a process, where a subsidiary company is separated from the parent company. Subsidiary company has a new board of directors and financial statements. Parent company offers strategic support and resources.The parent company also retains controlling the interest in the new entity. Equity carve out allows strategically ... Read More

A split is the process of dividing a company into two or more legal units. Its main aim is to maximize profitability by eliminating the stagnant units.The splits are divided into the following −Split upsCompany is divided into two or more entities, where the parent company loses its existence. In ... Read More

Spin offs is the process of creating a new separate legal entity under its own management and board of directors. Parent company distributes the new shares to its existing shareholders.A brief idea of spin offs is given below −Main objectivesThe main objectives of spin off are as follows −Valuation for ... Read More

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 ... 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 ... Read More