3.1.3 - Demergers

• What are some challenges associated with demergers?

  Restructuring costs and loss of synergies between divisions.
• What is a business demerger?

  A company separates part of its operations into a new entity
• What is the purpose of a demerger?

  To streamline operations and refocus on core competencies
• What are synergies in the context of a demerger?

  Benefits gained from the combined operations of different divisions
• What is asset stripping?

  It refers to selling off parts of a company to raise capital
• What is a horizontal demerger?

  A demerger that focuses on core business areas to raise capital
• What are some consumer benefits of a demerger?

  Increased shareholder returns and focused management efficiency
• What are some challenges associated with demergers?

  Restructuring costs and loss of synergies between divisions
• Can you name an example of a company that has undergone a demerger?

  Hewlett-Packard splitting into HP Inc and Hewlett Packard Enterprise
• What factors are important in evaluating a demerger?

  Planning, execution, market conditions, strategic benefits, and standalone risks
• What is the summary of demergers?

  • Demergers allow companies to streamline operations
  • They separate operations into focused entities
  • Can increase efficiency and shareholder value
  • Come with challenges such as restructuring costs