Wednesday, June 3, 2015

Splitting a company into two


1. Reduces liability (when one division is more risky). A builder may split his company into 2: one for building and one for holding land. If he loses his building business, his land will not be used to pay for lenders.

2. Satisfy the government regulations (true in Computer Science) easier.

3. Worth more in parts than as a whole.


1. Almost double the administration cost (not important for big company like Computer Science) and moving offices.

2. Reduce the synergy such as transferring knowledge learned from one company to another.


Small investors will have to spend more time in keeping track of their tax basis. I had a hard time when TWA split into several companies.

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