Chapter 29, Problem 4CQ

Summary Introduction

To explain: The reasons to split off a division of a company and to identify any possibility of reverse synergy.

Synergy:

Synergy is a state in which two or more companies combined together to perform better than the sum of their individual efforts in terms of productivity, revenue, and so on.

Spilt Off:

Spilt off is a corporate strategy of creating a value by separating the corporate assets. It is restructuring an existing corporate structure in which shares of the subsidiary company is transferred to the shareholders of the parent company in lieu of the stock of the parent company.