Divestitures: Creating Value Through Strategy, Structure, and Implementation

CHAPTER 1

Removing Problematic Businesses

INTRODUCTION

Strategy is defined as the actions that executives take to attain one or more of their companies’ objectives, which ideally result in greater profitability and higher returns to shareholders. Divestitures are one such action, and they can achieve four primary objectives for the companies that undertake them: divestitures can remove problematic businesses, improve corporate focus, reconfigure the corporate portfolio, and address regulatory requirements. Each of these four strategies is respectively motivated by a distinct factor: underperformance, overdiversification, the need (or desire) to change corporate scope, and government fiat. The differences among these four motivating factors imply ...