2. Reverse synergy may be to the advantage of the firm (Allegis)
3. The division is a poor performer (Quaker Oats).
4. Poor capital market access may limit the usefullness of the division (Koger Properties).
5. Firm may be experiencing cash flow problems (Chrysler)
6. The firm may be abandoning its core business (Greyhound)
2. A broad range of factors must be considered.
3. The disposal of a division is a major marketing operation.
4. The sum of the parts of the company may be greater than the market value of the company as a whole.
5. Simple components of a division may be sold more easily than the whole complex division itself.
6. The planning should include an evaluation from the viewpoint of potential buyers.
7. Key personnel of the division may present an important problem.
8. A spin-off should be considered if the division has suf f icient size and potential to be publicly-owned company.
9 . The negotiators must maintain communications with the planning technicians.
10. The fact that a sales agreement is drawn up and signed is not an appropriate signal that the seller's team can relax.
2. How will the offer change if you wait? Will it be higher or lower?
3. How long will it take for the next offer? What is the cost of waiting
until the next offer? (current losses vs opportunity cost of waiting).
2. Project the potential cash needs during the period:
(b) debt financing
(c) working capital needs
4. Calculate the discounted cash flow of the future returns and the terminal value using an appropriate discount rate.
5. Make appropriate adjustments for the following:
(b) possible synergistic effects (complementary product lines, sales patterns or distributional facilities)
(c) perceived value of the personnel.
(d) some measure of uncertainty regarding purchases of these elements
as affecting valuation.
7. Compare the resulting value with the proceeds from a bona fide offer.