What is the difference between acquisition and divestiture

Project Consulting Group. What is the Merger, Acquisition, and Divestiture Process? Analyze and determine which acquisition target has the healthiest balance sheet and represents the lowest risk to your company in achieving its goals.

Determine - Select a short list of acquisition targets and conduct financial due diligence and investigative research to determine top candidate. Cash payment options and requirements, Communications planning and implementation including Internal Communications, Public Relations, Investor Relations, and Media Relations. September 23, 2 minute read. September 20, less than a minute. September 20, 2 minute read. September 8, less than a minute. September 3, 2 minute read.

September 3, less than a minute. September 2, 2 minute read. September 2, less than a minute. September 2, 3 minute read. August 17, 2 minute read. August 16, less than a minute. August 12, less than a minute. July 29, 2 minute read. July 28, 2 minute read. July 15, 2 minute read. July 1, less than a minute.

June 24, 3 minute read. June 23, less than a minute. June 16, 2 minute read. June 14, 2 minute read. June 10, less than a minute. Whether or not the deal is structured as a tax-free reorganization will affect the tax treatment of any new shares of the acquirer's stock that you receive in exchange for your old shares. A divestiture can be any among a broad range of transactions that result in a portion of a company, such as a subsidiary, a division, or a line of business, being sold to another party.

A spinoff is a type of divestiture in which the divested unit becomes an independent company perhaps through an IPO instead of being sold to a third party. The form and structuring of these corporate transactions are the purview of attorneys and accountants and are done in a particular manner for variety of complex legal, tax, and economic reasons.

At the least, the acquisition or merger transaction is most likely to be considered a "change of control" under your stock plan check it for the technical definition and timing under your plan. Triggering this provision will probably have some impact on your grants, such as accelerating the vesting. Divestitures and spinoffs also affect outstanding equity grants in various ways, depending on how they are structured. Develop and improve products.

List of Partners vendors. A divestiture is the partial or full disposal of a business unit through sale, exchange, closure, or bankruptcy. A divestiture most commonly results from a management decision to cease operating a business unit because it is not part of a company's core competency.

A divestiture may also occur if a business unit is deemed to be redundant after a merger or acquisition , if the disposal of a unit increases the sale value of the firm, or if a court requires the sale of a business unit to improve market competition. A divestiture is the disposition or sale of an asset by a company as a way to manage its portfolio of assets.

As companies grow, they may find they're in too many lines of business and must close some operational units to focus on more profitable lines. Many conglomerates face this problem. Companies may also sell off business lines if they are under financial duress. For example, an automobile manufacturer that sees a significant and prolonged drop in competitiveness may sell off its financing division to pay for the development of a new line of vehicles.

Divested business units may be spun off into their own companies. Companies may be required to divest some of their assets as part of the terms of a merger or acquisition.

Governments may divest some of their interests or property—called privatization —to raise money to pay off debt or give the private sector a chance to profit. By divesting some of its assets, a company may be able to cut its costs, repay its outstanding debt, reinvest, focus on its core business es , and streamline its operations.

This, in turn, can enhance shareholder value. Large companies experiencing unstable market conditions and competitive pressures may divest part of their business. There are many different reasons why a company may decide to sell off or divest itself of some of its assets.

Here are some of the most common ones:. Government regulation may require corporations to divest some of their assets, especially to avoid a monopoly.