FAQs
Divesting is the act of a company selling off an asset. While divesting may refer to the sale of any asset, it is most commonly used in the context of selling a non-core business unit. Divesting can be seen as the direct opposite of an acquisition.
Is divestiture good or bad? ›
A divestiture is an important means of creating value for companies in the mergers, acquisitions, and the consolidation process. Through divestiture, a company can eliminate redundancies, improve operational efficiency, and reduce costs.
What is an example of a divestment? ›
An example would be Ford Motor Company selling off some of their businesses to focus on their core operations. Companies don't prefer to invest in subsidiaries or non-performing units during financially distressful times. It's much better to sell off the assets and save money to prevent insolvency.
What is a synonym for divestiture? ›
denial detriment disadvantage dispossession distress divestiture expropriation loss removal seizure want withdrawal withholding. Weak match. deprival.
What is a real life example of divestiture? ›
In 2008, at the cusp of the global financial crisis, Ford Motor Company divested itself of its luxury brands, Jaguar and Land Rover, selling them to Tata Motors for $2.3 billion. The move was part of Ford's broader restructuring strategy to focus on its core Ford brand and to free up capital.
What happens to employees in a divestiture? ›
Employees will transfer automatically to the buyer at the time of the share sale. In an asset sale, however, a buyer and seller will negotiate the specific assets, liabilities and people that the buyer will take on.
What are the disadvantages of divestiture? ›
Divestment is typically a more labor-intensive process than acquiring a new business. While business acquisitions can take as long as needed, a divestment comes with strict time constraints.
Is divesting the same as selling? ›
Divestment involves a company selling off a portion of its assets. This is often done to improve company value and obtain higher efficiency. Divestment lets many companies sell off peripheral assets to enable their management teams to better focus on the core business.
What is divestiture in simple words? ›
A divestiture (or divestment) is the disposal of company's assets or a business unit through a sale, exchange, closure, or bankruptcy.
What happens when a company divests? ›
A divestiture is when a company or government disposes of all or some of its assets by selling, exchanging, closing them down, or through bankruptcy.
Examples of famous companies using divestiture strategies
In 2021, General Electric, Johnson & Johnson and Toshiba all announced plans to disband into several smaller companies.
Does divestment actually work? ›
Stock prices remain steady: Research finds that there's very little correlation between divestment campaigns and stock value or company behavior, Witold Henisz, vice dean and faculty director of the environmental, social and governance initiative at The Wharton School of the University of Pennsylvania, told CNN.
What is the opposite of divest? ›
The correct answer is 'Give'. Key Points. The most appropriate antonym of the given word 'Divest' is 'Give'.
Is a divestiture an asset sale? ›
Divestiture is the strategic process of selling a business unit or an asset. It is one of the most complicated transactions in the M&A industry because the seller is not selling the entire entity but a portion that is part of a larger entity.
What is alternative to divestment? ›
Benefits of swapping. Similar to divestment, the swap approach establishes zero economic exposure to the excluded firms, as the physical long positions are offset by the short side of the swap. From a financial risk management perspective the two approaches are therefore equivalent.
What does it mean to divest something? ›
1. a. : to deprive or dispossess especially of property, authority, or title. divesting assets to raise capital.
What happens when you divest? ›
Divestment occurs when a company sells off some or all of its assets or subsidiaries. While most divestment decisions are deliberate efforts to streamline operations, forced selling of assets could result from regulatory or legal action such as bankruptcy.
Why do people divest? ›
Source of funds
In times of financial difficulty and to keep the business afloat, businesses sell off their non-core assets. Instead of investing their money in a subsidiary or unit that is performing poorly, businesses will sell the assets and save money to prevent insolvency.
What is another word for divest? ›
Definitions of divest. verb. take away possessions from someone. synonyms: deprive, strip.