When considering a divestiture (de-merger), which is not a strategy to use?

Question

BlackTom AI · Accepted Answer

Question: When considering a divestiture (de-merger), which is not a strategy to use?

Option presented: Carve-off.

Analysis of the option: Carve-off is not a widely recognized or standard term for a divestiture strategy in corporate restructuring literature. In typical practice, divestiture strategies include methods like spin-off, split-off, equity carve-out, asset sale, or complete sale of a subsidiary to another party. Because carve-out (with the specific spelling) is the established term referring to a partial divestiture where a subsidiary is separated and distributed to shareholders or sold on the open market, the variant phrasing “carve-off” does not align with the conventional nomenclature and process. This makes it an inappropriate or incorrect label for a formal divestiture strategy, depending on the textbook or regulatory framework being applied.

Implications of this interpretation: If the expected correct answer follows standard terminology, a more accepted divestiture strategy would be carved as a carve-out or one of the other recognized approaches (spin-off, split-off, asset sale, etc.). The use of “carve-off” could be considered a misnomer or a nonstandard term, and thus not a valid strategy name in formal analyses.

Important note about missing options: The question’s answer options list is not provided in full here, which limits comprehensive comparison. However, given the single option shown—Carve-off—and the typical framing of divestiture strategies, treating “carve-off” as not a valid, standard strategy aligns with common practice.

In summary, Carve-off is not recognized as a standard divestiture strategy in most frameworks, which is why it would be considered the option that is not a valid strategy for a de-merger in this context.

BU.231.740.51.SP25 Homework #5

When considering a divestiture (de-merger), which is not a strategy to use?

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