Divestitures: Creating Value Through Strategy, Structure, and Implementation

INTRODUCTION

Maintaining a tree involves regularly pruning its branches. The designated branches might be competitors for such resources as sunlight, water, or nutrients, or they might be inconsistent with one’s conception of the tree. Perhaps they interfere with the tree’s desired shape, or dangerously unbalance it; perhaps they are old growth, or now-unproductive grafts. Whatever the cause, the branches are pruned.

Pruning a tree is the arboricultural equivalent of corporate divestitures, transactions in which a company sells one of its businesses to another entity, spins it off into an independent company, or removes it from the company’s portfolio through some other structure. The analogy exemplifies some of the different reasons why divestitures ...