a) Reasons

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Last updated 9:14 PM on 4/28/26
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5 Terms

1
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  • define demerge

  • when a firm

  • sells one of its businesses

  • or

  • splits into multiple firms

2
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  • state the reasons firms often demerge

  • profitability

  • management

  • risk mitigation

3
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  • explain how profitability justifies a demerger

  • prevents diseconomies of scale

  • more perceptive to market changes

4
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  • explain how efficient management justifies a demerger

  • streamlined focus

  • less bureaucracy

5
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  • explain how risk mitigation justifies a demerger

  • removes loss making firms/early and high-debt projects

  • prevents transitional instability