本文发表在 rolia.net 枫下论坛My firm has been advising one client on corporate reorganization. Or in simple terms, to separate certain line of business from the main operation. Because the investors weren't happy with the performance of certain business which has dragged down the overall share price, a number of principle shareholders urged the management to take action to improve the situtation. Stepping away from the real case for a moment, let's refresh ourselves on some theories behind the spin-off concept:

Factors normally considered to justify a spin-off

1. help focus on core business or operation specialization
2. the intrinsic value of certin business was discounted i.e. not reflected in the trading price of the conglomerate company (why? probably the investors and/or anlaysts don't fully figure out the value of the business due to complex business consolidation/combination)
3. Loss of business due to concern about competition (i.e. companies are unlikely to buy from their competitors' subsidiaries)

Tax is always a key consideration in spin-off strategy selection. Investor definitely don't want to pay taxes unnecessarily, so sale of assets is usually less preferable than tax deferred spin off. However, there are actually more sale of assets observed for some accounting gain and cashflow incentive to the management. This is another example of agency conflict between the management and the investors.

Are above theories all applicable in the real world?

a. tax is always applicable as no one wants to pay taxes
b. not all factors are considered or applicable in each case
c. the key is still to looking for respective objectives of different stakeholders and see if you can reconcile among them.
d. Ability to see through complex relationship among stakeholders and negotiate effectively are much more important than knowing the theories.更多精彩文章及讨论，请光临枫下论坛 rolia.net