Divestitures: Creating Value Through Strategy, Structure, and Implementation

CHAPTER 5

Sales

INTRODUCTION

Divestiture structures can be placed on a continuum with a dominant structure at each end: sales on the left and spinoffs on the right (see Exhibit 5.1). In a sale, a divesting company transfers one of its businesses to a counterparty in return for cash or other consideration, while in a spinoff, a divesting company distributes shares in one of its businesses to its existing shareholders, resulting in the creation of a separate public company. Between the two ends of this continuum are four additional divestiture structures that combine elements of the structures at each end. Moving from left to right, from sales to spinoffs, the four intermediate structures are joint ventures (in actuality, deferred sales), tracking ...