Evaluate the Effects of Selling a Subsidiary or Division

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During the best and worst of times, your company may be tempted to sell a division or subsidiary. This can make sense for a number of reasons, including:

There are several ways to complete a sale or divestiture. You can:

But before taking any action, answer these questions:

Get your accounting firm and attorney involved as soon as possible. There will likely be volumes of paperwork. The sooner your attorney gets onboard, the quicker the legal aspects will start moving smoothly without hindering the sale process. Your accounting firm can provide access to a valuation specialist to help establish how much the business is worth on the open market.

Alternatives to Selling

Rather than selling a unit, there may be other options including:

  1. Expanding by adding new products or services.
  2. Forming a joint venture or strategic alliance.
  3. Cutting costs strategically to increase margin while positioning the business for growth.
  4. Closing the subsidiary temporarily or reducing product line to save cash.

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