Corporate Divesture/Spin-off Analysis help
Hello All, want to get some advice on this analysis I am doing.
My task is to see, for a large multinational conglomerate, whether any of its distinct business units should be spun-off or sold off as separate businesses. The conglomerate is trying to hit certain growth targets, and feels like some of the slow growth cash cow business units is holding them back (those cash cows could be profitable and high margins tho).
The key here is to hit growth targets, like a certain %, both in terms of revenues and also earnings.
So I have each business units revenues, COGS, OPEX, and contribution margin.
Obviously the entire company financials as well.
How would you go about with this analysis? Thanks!
Try out different combinations of business units and adjust overhead upwards because fewer economies of scale. See which one optimizes growth rates and makes sense from a qualitative standpoint.
thanks, but I do not have a linked model, just individual data points. any other ideas?
High margin does not mean high growth.
You should spinoff the slow growing business units. Look at the recent action in the Oil & Gas space (e.g. Marathon).
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