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What is the mean of Divestment strategy? When i...

What is the mean of Divestment strategy? When is it recieved?

What is the mean of Divestment strategy? When is it recieved?

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Chiranjibi Chapagain Mar. 08, 2018

Divestment, also known as divestiture, is the opposite of an investment, and it is the process of selling an asset for either financial, social or political goals. Assets that can be divested include a subsidiary, business department, real estate, equipment and other property.

This is generally adopted by a company in because of following reasons:

  1. When a turnaround has been attempted but has proved to be unsuccessful.
  2. A business that had been acquired proves to be a mismatch and cannot be integrated within the company. 
  3. Persistent negative cash flows from a particular business create financial problems for the whole company.
  4. Severity of competition and the inability of a firm to cope with it.
  5. Technological upgradation is required if the business is to survive but where it is not possible for the firm to invest in it.
  6. A better alternative may be available for investment.

What is the mean of Divestment strategy? When is it recieved?

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