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Sell Business through Demerging the Business Undertaking

This popularly known as spin-off strategy, this is advised when the transferor wants to divest one or more business undertaking out of total consortium businesses.

This strategy is useful when the transferor wants to hive-off or divest his non-core business/ undertaking or part thereof. This is advantageous for both transferor and the acquirer as it helps increase business focus.

Strategic Demerger is typically carried out through following steps:

Step 1. Find Acquiring Company


Shortlist buyer company, based on requirements and objective. You can register your details and requirements on our "buy sell centre".

 
Step 2. Primary Valuation


This valuation done by seller to get better idea about value of the business.
 
Approx.
2 weeks
Step 3. Analysing and Finalizing Acquirer Company


Analyse shortlisted acquirer company considering objectives, structuring and cost and time efficiency.

OR

Analysis of shortlisted acquirer company; should consider objective of the deal, cost and time involved in execution and structure of the deal. This helps to get a better idea about the deal before finalisation.

 
Approx.
2 weeks
Step 4. Sign MoU/Term sheet


Once the acquiring company is selected there is need to sign MoU (Memorandum of understanding) which helps acquiring company to get access of target companies information for making due diligence, valuation etc.
 
Approx.
2 weeks
Step 5. Valuation


Valuation is a process of determining the value of an asset or business. It is one of the most important aspects of Demerger process as target Company wants maximum valuation for its business whereas acquirer wants it at lowest end. Valuation of business is mandatory for listed company.

Following are various methods to value business:

 
Approx.
2 weeks
Step 6. Deal Structuring


A deal should be structured considering agreement between acquirer and the company divesting. It should be time, cost and compliance effective.

While structuring the deal following factors must be taken into consideration:

 Objective of the deal

This includes the core objective set for deal of demerger while structuring the deal it must be taken into consideration that objective is getting achieved fully. As post deal factors such as ownership and control, financial impact are decided on the basis of deal structuring.

 Transaction cost involved
 Discharge of consideration
 
Know your costs online
Post your details to know
Approx.
2 weeks
Step 7. Drafting scheme


Once the structure is decided, scheme of arrangement is drafted; Scheme is a legal document which contains all the arrangements agreed and entered between companies.

 
Approx.
2 weeks
Step 8. Deal Execution: Co-ordination & obtaining approval
            from Hon'ble high court and various Government Authorities


The drafted scheme of arrangement has to be approved by hon'ble high court of that particular state in India. This includes a detailed court procedure. Also there are various other government authorities to get the scheme approved.

 
Approx.
2 weeks
Step 9. Post Demerger Compliances


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Approx.
2 weeks
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