Divestitures of Divisions and Subsidiaries Resource Kit

Summary

A divestiture involves the sale by a company of one or more of its subsidiaries, businesses, divisions, or other set of assets, as compared to a sale of the entire company or all or substantially all of its assets. There are a wide variety of reasons why a company would pursue a divestiture transaction, including (1) strategic reasons, such as improved profitability or efficiency if the divested business is held separately; (2) financial reasons, such as the need to raise capital or take advantage of market conditions; (3) M&A-related considerations, such as preparing the company for a broader sale transaction or, alternatively, making the company a less attractive takeover target; (4) regulatory reasons, such as satisfying a condition to obtaining antitrust approval; and (5) as a result of the influence of shareholder activists looking to maximize shareholder value.