Divestiture

A divestiture is the process of selling off or disposing of a company’s asset, subsidiary, or business unit. Companies divest to focus on their core business, raise capital, reduce debt, or streamline operations. Divestitures can occur through outright sales, spin-offs, or asset transfers to other companies. This strategy is often used when a company believes a particular asset is underperforming or doesn’t align with its long-term goals. Divestitures may also be required by regulators in cases of mergers or acquisitions, where anti-trust concerns arise.

Example

A large conglomerate sells its underperforming retail division to focus on its more profitable technology and energy sectors.