Business Failure and Corporate Restructuring
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I have to answer the questions below in 350 words. I have been reading the chapter and don't fully understand these questions.
Explain the variety of "restructuring" alternatives that are available to M&A's as a result of an impending or actual failure including the following:
Spin-offs
Divestitures
Liquidation
Carve-outs
Tracking stock
Limited partnerships
Create a scenario illustrating how contingency planning through scenario analysis, options, or hedging can be used to avoid failure.
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Solution Summary
The solution explains the various restructuring alternatives available to avoid failure of the business.
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If the M&A does not go properly, then the acquiring company may wish to restructure using the following alternatives
Spin-offs - In a spin-off, the acquiring company may spin-off the acquired company by creating the acquired company as a subsidiary and distributing the shares of this subsidiary to the existing shareholders of the firm. The subsidiary becomes an independent company with its own board and management. This helps the management of the parent company to focus on its own business.
Divesture - A divesture is when the acquired company is removed from the acquiring company. The divesture may ...
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