Divestiture Là Gì

James Chen, CMT, is the former director of investing & trading content at jualkaosmuslim.com. He is an expert trader, investment adviser, và global market strategist.

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Khadija Khartit is a strategy, investment, and funding expert, and an educator of fintech & strategic finance in top universities. She has been an investor, an entrepreneur & an adviser for 25 + years in the US & MENA.

What Is a Divestiture?

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.

A divestiture may also occur if a business unit is deemed lớn be redundant after a merger or acquisition, if the disposal of a unit increases the sale value of the firm, or if a court requires the sale of a business unit to lớn improve sầu market competition.

Divestitures happen when a company disposes of all or some of its assets by selling, exchanging or closing them down, or through bankruptcy.As companies grow, they may decide that they are involved in too many business lines, so divestiture is the way lớn stay focused & remain profitable.Divestiture allows companies to cut costs, repay their debts, focus on their core businesses, and enhance shareholder value.

Understanding Divestitures

In its simplest size, a divestiture is the disposition or sale of an asset by a company, a way to manage its portfolio of assets. As companies grow, they may find they are in too many lines of business và they must cthua thảm some operational units lớn focus on more profitable lines. Many conglomerates face this problem.

Companies may also sell off business lines if they are under financial duress. For example, an autoMobile manufacturer that sees a significant và prolonged drop in competitiveness may sell off its financing division khổng lồ pay for the development of a new line of vehicles.

Divested business units may be spun off inkhổng lồ their own companies rather than closed in bankruptcy or a similar outcome. Companies may be required to divest some of their assets as part of the terms of a merger. Governments may divest some of their interests in order to give sầu the private sector a chance to lớn profit.

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By divesting some of its assets, a company may be able to lớn cut its costs, repay its outstanding debt, reinvest, focus on its core business(es), and streamline its operations. This, in turn, can enhance shareholder value. This is especially important when there is volatility in the markets or if the company experiences unstable conditions, và especially when there is an undergoing disruption in the industry by rising startups, currently the case for many established large corporations.

Divesting Assets

There are many different reasons why a company may decide lớn sell off or divest itself of some of its assets. Here are some of the most common ones:

Bankruptcy: Companies that are going through bankruptcy will need to sell off parts of the business.Cutting baông xã on locations: A company may find it has too many locations. When consumers just aren"t coming through the doors, the company may be forced to cthua or sell some of its locations. This is especially true in the retail sector, including in fashion, banking, insurance, food service, travel, & many other industries. This has been ongoing for some time, and it accelerated drastically in the current post-Covid era.Selling losing assets: If the dem& for a hàng hóa or service is weaker than expected, a company may need khổng lồ sell it. Continuing to produce & sell an underperforming asmix can cut inkhổng lồ the company"s bottom line when it can concentrate on those that are performing well.

Government regulation may require corporations to divest some of their assets, especially lớn avoid a monopoly.

Examples of Divestitures

Divestitures can come about in many different forms. The most common is the sale of a business unit to lớn improve financial performance. For example, Thomson Reuters, a multinational media & information company based in Canadomain authority, sold its intellectual property and sciences division in July năm 2016. The company initiated the divestiture because it wanted to reduce the amount of leverage on its balance sheet.

The division was purchased by Onex và Baring Private Equity for $3.55 billion in cash. The division booked sales of $1.01 billion in năm ngoái, & 80% of those sales are recurring, making it an attractive investment for the private equity firm. The divestiture represented one-quarter of Thomas Reuters" business in terms of divisions but is not expected khổng lồ alter the company"s overall valuation.

Divestitures can also come about due to lớn necessity. One of the most famous cases of court-ordered divestiture involves the breakup of the old AT&T in 1982. The U.S. government determined AT&T controlled too large a portion of the nation"s telephone service and brought antitrust charges against the company in 1974. The divestiture created seven different companies, including one retaining the name AT&T, as well as new equipment manufacturers.