A divestiture refers to the process of selling off a portion of a company’s assets or a subsidiary. This can occur for various reasons, including strategic realignment, financial necessity, or regulatory requirements.

Characteristics
– Asset Sale: Involves selling specific assets, divisions, or subsidiaries rather than the entire company.
– Strategic Decision: Often part of a larger strategy to focus on core business areas or improve financial performance.
– Regulatory Compliance: May be required to comply with antitrust laws or other regulatory mandates.
– Financial Impact: Can provide immediate cash flow or reduce debt, improving the overall financial health of the remaining business.

Examples
– A large technology company selling its hardware division to concentrate on software development.
– A conglomerate divesting a non-core subsidiary to streamline operations and enhance profitability.
– A pharmaceutical company selling off a division that produces a product that is no longer aligned with its strategic goals.