Principles of Private Firm Valuation

Creating and Measuring the Value of Private Firms 21

Company A without subsidiary B

subsidiary B

Company C

Buying company

FIGURE 2.3 Structure of a Divestiture

(a)Company before Divestiture

Company A w/o

Company C

Management of sub

Old sub B

Consideration: Cash, securities,

or assets

Whatdoe

sCompanyAdowithconsideration?

(b)Company after Divestiture