3.1.3 Demergers

Question 1

Strategic Focus:

Answer 1

A company splits up to focus on what it’s best at (core business).
This helps them concentrate on better planning and success in those areas.

Question 2

Value Unlocking

Answer 2

Demergers can reveal hidden value within a conglomerate. When separate business units are split off, they often attract more interest from investors, increasing their overall value.

Question 3

Enhanced Efficiency:

Answer 3

Sometimes, large organizations become less efficient due to bureaucracy and administrative overhead. Demergers can lead to streamlined operations and cost reduction.

Question 4

Risk Mitigation:

Answer 4

By splitting up different parts of the business, a company can isolate specific risks. This is especially useful if one part of the business has a high risk that could affect the whole company.

Question 5

what is a demerger

Answer 5

A de-merger is a corporate strategy in which a company separates one or more of its business units into separate, independent entities.19 Mar 2023