Divestment Definition  

Divestment, or divesture, is reducing some kind of asset or financial standing by sale of existing business. The divestment is done for several reasons, and the ulterior motive is always the betterment of the company

The divestment activities are always the opposite of the investment activities. It is common for some firms to divest after they grow to a certain extent. Some firms may expand and then they realize that the expansion was not good. So they may decide to sell that part of the firm, and be done with it. There are several reasons why a firm should divest. It is usually be for the overall betterment of the business in most cases.

Divestment does not necessarily mean that the company is under losses. It is only partially true, and it does not apply to all cases. Sometimes, firms also divest to maximize profit. If some types of business are doing well and the firm wants to break its company down, then it could be a more profitable deal for them.

Firms also divest in order to pay off their debts and consolidate their finances. It gives a better picture on their financial profile when they do not have debts.

Firms may divest because they cannot concentrate on that part of the business as it is not their core competence. Also, firms may sell that part of the company because it is not doing well or even failing.

There are several reasons why businesses opt to divest. The divestment advisors may help to consolidate the firm in such a way where they are left with minimal financial headaches, and also more funds.

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Divestment Definition




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