a) Reasons

a) reasons for demergers

demerge = when a firm sells one of its businesses

or

splits into multiple firms

reasons to demerge

• profitability

  • prevents diseconomies of scale

  • more perceptive to market changes

• management

  • streamlined focus

  • less bureaucracy

• risk mitigation

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

  • prevents transitional instability