Bifurcation

AAA

DEFINITION of 'Bifurcation'

The splitting of a larger whole or main body into two smaller and separate units. Bifurcation can occur when one company divides into two separate divisions, thereby creating two new companies that can each issue shares to stockholders. Shareholders in the initial company are given shares of the new company through a corporate reorganization. Companies may seek bifurcation for certain tax advantages.


Bifurcation also refers to the analysis or evaluation of market conditions based on two distinct scenarios.

INVESTOPEDIA EXPLAINS 'Bifurcation'

Bifurcation, as it relates to finance, usually refers to the dividing of one company into two separate companies. This can provide tax advantages to the company as well as increased financial opportunities for shareholders. The term bifurcation has other applications in law, hydrology, fluid dynamics, mathematics, economics, chemistry, anatomy and physiology. In each application, bifurcation refers to the splitting in two of a certain element or system, such as the splitting of a single hydrogen atom participates into two hydrogen bonds.

RELATED TERMS
  1. Reorganization

    A process designed to revive a financially troubled or bankrupt ...
  2. Reverse Stock Split

    A corporate action in which a company reduces the total number ...
  3. Stock Split

    A corporate action in which a company divides its existing shares ...
  4. Split-Up

    A corporate action in which a single company splits into two ...
  5. Synthetic

    A financial instrument that is created artificially by simulating ...
  6. Derivative

    A security whose price is dependent upon or derived from one ...
Related Articles
  1. 10 Steps To Tax Preparation
    Taxes

    10 Steps To Tax Preparation

  2. Tax Tips For The Individual Investor
    Retirement

    Tax Tips For The Individual Investor

  3. Understanding Stock Splits
    Investing Basics

    Understanding Stock Splits

  4. Don't Let Stock Prices Fool You
    Active Trading

    Don't Let Stock Prices Fool You

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center