What does divestiture involve?

Divestiture involves the sale or disposal of assets held by an organization. This process is often undertaken by businesses or government entities to streamline operations, raise capital, or focus on core functions. When a company decides to divest, it typically sells off a portion of its business, such as a subsidiary, product line, or specific assets, to realign its resources and strategies.

The rationale behind divestiture can vary, including improving financial performance, enhancing shareholder value, or complying with regulatory requirements. In government, divestiture can also occur as part of privatization efforts, where public assets are sold to private entities to improve efficiency and reduce public sector burden. Understanding this concept is vital, as it highlights strategic decisions organizations make to better their positions in competitive markets or to meet organizational goals.