myz-vgb.ru A Business Encyclopedia

Divestiture

Definition: The Divestiture means the sale or disposition of certain company’s assets or a business unit which is not performing well and is disposed of either through closure, sale or bankruptcy. Thus, the divestiture involves some kind of contraction and is based on the principle which says 5-3 = 3! opposite of the principle of merger & acquisition which says, 2+2 = 5!.

The company divests with the intent to manage their asset portfolios. This means removing all those assets that are not contributing to the core business operations. As the business grows, a firm enters into several business lines due to which it is often difficult or impossible for a firm to focus on its core businesses. Thus, one of the reasons for employing the divestiture is to sell off the unrelated business units and restore the focus on the core business unit.

The Divestiture can be done in any of the following ways:

Divestiture-final

  1. Partial Sell-offs
  2. Demerger (spin-off and split-up)
  3. Equity Carveout

Sometimes, a firm finds that some of its business units are underperforming, so it can sell those units and reduce the operating losses. Also, with the divestiture, the firms can obtain funds that can be used to pay off the debts or can be used more wisely in the purchase of capital goods.

Leave a Reply

Your email address will not be published. Required fields are marked *

Shares

Related pages


definition of monopolistic competition in economicswhat is the meaning of flankemployee referral definitiondefinition of oligopoly in economicswhat is autocratic leaderwhat is the meaning of neft transactiondifference between demand estimation and demand forecastingdefinition of flankoligopoly in economicstypes of training hrmexamples of job enrichmentmarkup accounting definitionvroom meaningapa itu brand equitybanking jargonswhats a aptitude testmacgregor's theory x and theory ywhat is monetarist economicsreward power and coercive powermarginal costing in decision makingmultistage cluster samplingsubstitution method examplespearman correlation coefficient formuladelphi definitiondeficit meaning in hindiadvantages of profitability indexunstructured questionnairesconsumer equilibrium with the help of indifference curvefiedler leadershipwhat is judgement samplingstrategic hrm planning processdefinition of social loafingdefinition of recruitment and selection in hrmlaw of diminishing marginal utility economicsbureaucratic management theory by max weberoperant conditioning definedvertical channel conflict exampleblack scholes option calculatorsalesforce advantages and disadvantagesindifference curve propertiesdeontological definition ethicsrecurring deposit account definitionitr meaningin communication connotative words areformula for profitability indexdebentures definitioncash budget purposehenry fayol 14 principlesautocrat definitionwhat is the meaning of fiscal deficitrevitalize definitiondemographics segmentation definitiondefine promotional pricingscientific management theory of organizationrecruit meaning in tamilhenry fayol 14 principlesethnocentric meanselements of promotional mixannuity depreciationwhat is operant conditioning in simple termsdefine quantity demandedjob enrichment meaningmeaning of subordinate in hindiwhat is demand forecasting in managerial economicsoligopoly markets examplesdefine entrepreneurial venturedefine divestsreorder quantity definitiontypes of forex risklikert scale descriptorsjudgemental meaning