Advantages of asset divestiture
As an important means of enterprise capital operation, asset divestiture implies the possibility of tax saving in the diversity of its business elements and financial disposal schemes. However, the current tax system provides differential treatment between turnover tax and income tax for enterprise behaviors such as equity transfer, legal person property right transfer and asset management right transfer, and provides legal conditions and institutional guarantee for reducing the tax cost in asset divestiture according to law. Different divestiture methods, such as asset transfer, company division and establishment of new company, are different in tax cost and operability, but they usually realize asset divestiture by establishing new company.
Types of asset divestiture
According to the realization of asset stripping, asset stripping can be divided into pure asset stripping and asset-liability stripping. Pure asset divestiture means that the company only divests some assets, and the acquirer pays in cash, quasi-cash, products or services. Asset-liability divestiture means that the company divests some assets and liabilities together, and the difference is paid by the acquirer in cash and quasi-cash assets. Its essence is that the acquirer buys assets by paying debts, but because it involves the interests of creditors, it must first obtain the consent of creditors.
According to the types of assets, divestiture can be divided into two forms: one is the transfer divestiture of financial assets such as securities; The other is the sale and transfer of physical assets and intangible assets, including agreement transfer, auction and sale.
Reasons for asset divestiture
There are many reasons for the company to divest assets, which can be mainly divided into the following categories:
1. Highlight the main business, and the company's diversified operation will greatly reduce the synergy between various businesses. Only by eliminating businesses unrelated to the core business can we concentrate superior resources and ensure the development advantages of the main business.
2. Adjust the main business. When the company's original main business loses its development advantage or seeks to transform into a new business, it can divest its original main business and shift its focus to a new business with development potential and prospects.
3. Reduce the debt burden, improve the financial situation and optimize the capital structure. In order to reduce the financial burden and improve the liquidity and profitability of assets, some companies with serious losses or high debts will divest some loss-making, inefficient or idle assets, which can not only obtain certain income, but also improve the situation of enterprises.
4. Eliminate inappropriate business. If part of the assets of the target company do not meet the strategic requirements of the acquirer, after the acquisition is completed, the acquirer will divest the assets of the target company that are not suitable for him, thus achieving the purpose of acquisition.
5. Avoid being acquired, which is a measure of anti-takeover. By stripping off the high-quality assets in the company, the purpose of avoiding hostile takeover can be achieved.
There are many reasons for asset divestiture, such as changing the company's image, increasing the market value of the company's shares, meeting the company's cash demand, getting rid of the burden of operating losses, anti-monopoly regulatory requirements and so on. But in general, it is the strategic choice of the company's business development, not the performance of poor management.