What Does It Mean When a Company Divests?

What Is Divestment? Divestment is the process of selling subsidiary assets, investments, or divisions of a company in order to maximize the value of the parent company.

Why would a company divest?

Through divestiture, a company can eliminate redundancies, improve operational efficiency, and reduce costs. Reasons why companies divest part of their business include bankruptcy, restructuring, to raise cash, or reduce debt.

What is the divestiture of a company?

A divestiture is the partial or full disposal of a business unit through sale, exchange, closure, or bankruptcy. A divestiture most commonly results from a management decision to cease operating a business unit because it is not part of a core competency.