Understanding Divestitures
Interactive

Understanding Divestitures

Wall Street Prep
Updated Feb 26, 2019
While mergers and acquisitions capture headlines, global spin-off transactions quietly reached a record high of over $250 billion last year. So why would a company want to spin off or divest a subsidiary? And how exactly is it done? With a specific look at eBay's 2015 spin-off of PayPal, here we will examine the value proposition of spin-offs and other popular divestiture mechanisms to answer the following: When does a divestiture make strategic sense? How exactly does a company carry out the separation? How do divestitures impact financial statements? What are the tax consequences of divestitures?