Divisional acquisitions: a clean break?

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A divisional acquisition involves the purchase of a business unit of a larger parent seller entity, where the seller will continue to operate other lines of business following the closing of the divisional divestiture. While the acquisition of a divisional enterprise will have many features in common with the acquisition of an entire enterprise, the assets and liabilities associated with the divisional enterprise may be less well defined than in the case of an entire business. Moreover, the operations of the division are often closely entwined with those of the parent — a situation that creates numerous legal issues for parties to the transaction. This article discusses some of the more important of these issues.

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