AFMP4
Syllabus D. Corporate Reconstruction And Re- Organisation D2. Business re-organisation

D2ab. Sell-offs 4 / 7

Syllabus D2ab)

a) Recommend, with reasons, strategies for unbundling parts of a quoted company.

b) Evaluate the likely financial and other benefits of unbundling.

A Sell-off

is a form of unbundling involve disposing the non-core parts of the company

  • involves selling part of a company to a third party for an agreed amount of funds or value

  • This value may comprise of cash and non-cash based assets.

The most common reasons for a sell-off are:

  1. To divest of less profitable and/or non-core business units.

  2. To offset cash shortages.

The extreme form of sell-off is liquidation, where the owners of the company voluntarily dissolve the business, sell-off the assets piecemeal, and distribute the proceeds amongst themselves.