Which of the following is a disadvantage of a de-merger?

A de-merger involves dividing a company into separate entities, which can lead to certain challenges. One significant disadvantage is customer confusion and possible abandonment. When a company splits, its customers may be uncertain about the future of the products or services they rely on. They might not be aware of which entity to turn to for support, leading to confusion regarding brand identity and product offerings. This uncertainty can result in customers choosing to abandon the brand altogether, impacting sales and customer loyalty.

In contrast, improved efficiency, reduced financial costs, and stronger brand recognition are typically associated with the potential benefits of a de-merger. These aspects can arise from the focused management of separate entities, where each can streamline its operations and create a clearer market presence. However, the disadvantage of customer confusion emphasizes the risks that need to be managed during such transitions.