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Dividends Act 1

Valuation is an important part of mergers and acquisitions to guide buyers and sellers to the transaction price. Divestitures involve disposing of company assets or business units through sale, exchange, closure, or bankruptcy, and are often part of mergers and acquisitions. Methods of divestiture include partial sell-offs of business subsidiaries, spin-offs where a business unit becomes independent, and ROI-based valuation evaluating potential investor returns.

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131 views1 page

Dividends Act 1

Valuation is an important part of mergers and acquisitions to guide buyers and sellers to the transaction price. Divestitures involve disposing of company assets or business units through sale, exchange, closure, or bankruptcy, and are often part of mergers and acquisitions. Methods of divestiture include partial sell-offs of business subsidiaries, spin-offs where a business unit becomes independent, and ROI-based valuation evaluating potential investor returns.

Uploaded by

Jane Dizon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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TRUE

1. Valuation is an important part of mergers and acquisitions (M&A), as it guides the buyer and
seller to reach the final transaction price.
TRUE
2. A divestiture (or divestment) is the disposal of company's assets or a business unit through a
sale, exchange, closure, or bankruptcy.
TRUE
3. Divestiture transactions are often lumped in with the mergers and acquisitions process.
TRUE
4. Partial sell-offs - Selling a business subsidiary to another company to raise capital and apply the
funds to more productive core units instead.
TRUE
5. Spin-off demerger - A business strategy wherein a company's division or unit is separated and
made into an independent company.
FALSE
6. Split-off demerger - When a company splits-up into one or more independent companies, and
consequently, the parent company is dissolved or ceases to exist.
TRUE
7. An ROI-based business valuation method evaluates the value of your company based on your
company's profit and what kind of return on investment (ROI) an investor could potentially receive
for buying into your business
TRUE
8. Similar to the capitalization of earnings valuation method, the multiple of earnings valuation
method also determines a business's value by its potential to earn in the future.
FALSE
9. The market value method calculates the value of your business at a given moment in time by
looking at your balance sheet.
TRUE
10. The dividend paying Capacity Method, sometimes referred to as the Dividend Payout Method, is
an income-oriented method but is considered a market approach as it is based on market data.

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