Define Divestiture

Question

Define Divestiture

Examlex · Accepted Answer

The Answer is Divestiture refers to the process of selling off assets, business units, or subsidiaries by a company or institution. This can be done for various reasons, such as to raise capital, streamline operations, or refocus on core business activities.

Two strategies that institutions use to create divestiture are:

1. Spin-off: In a spin-off, a company creates a new, independent entity by separating a business unit or subsidiary and distributing its shares to existing shareholders. This allows the institution to divest itself of a non-core business while giving shareholders ownership in the new entity.

2. Asset sale: Another strategy for divestiture is to simply sell off the assets or business unit to another company or investor. This can be a quicker and more straightforward way to exit a non-core business and realize value from the assets.

Both of these strategies can help institutions to streamline their operations, focus on their core competencies, and unlock value for shareholders.

Define Divestiture

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