Divestment involves a company selling off a part of its assets,often to improve the company value and obtain higher efficiency.It is the process of selling subsidiary assets,investments,or divisions of a company in order to maximize the value of the parent company.Divestment is usually done when the subsidiary asset or division is not performing up to expectations.The main reason for divestment is to eliminate non-performing and non-core business.The kinds of divestment are spin-off,equity carve out,or direct asset sale.
NEED FOR DIVESTMENT
- The most common use of divestment is to sell non-core business.
- Many businesses are divesting their properties to raise capital,selling an underperforming division,reacting to regulatory action and realising value through a break.
- A company may divest on businesses that are not part of its core operation so that it can focus on what it does best.
- During business,there might be pressure from shareholders to divest.
BENEFITS OF DIVESTMENT
- Divestment helps to lower operating debts.
- Divestment helps to support more company growth.
- It is used to improve the company value.
- It helps in increasing organisational efficiency and reduce employment risk.
Through this article we got to know that divestment improves a business selling its properties to increase its value and achieve higher performance. Assets that can be divested include a company,department of business,real estate,facilities,and other properties.Many businesses and companies are using divestment to increase capital.Divestment can produce revenue that can be used elsewhere in the organisation.
All the concepts of this topic <Divestment> have been compiled into a Certification Assessment Course. This Assessment will help you to check and enhance your knowledge about the subject and offer you to get certified from The Growth Central VC. This Assessment has been made considering the latest scenario of the industry.