Divestment
In finance and economics, divestment or divestiture is the reduction of some kind of asset for financial, ethical, or political objectives or sale of an existing business by a firm. A divestment is the opposite of an investment. Divestiture is an adaptive change and adjustment of a company's ownership and business portfolio made to confront with internal and external changes.[1]
This article is about the routine business practice. For politically motivated boycott, see disinvestment.Method of divestment[edit]
Some firms are using technology to facilitate the process of divesting some divisions. They post the information about any division that they wish to sell on their website so that it is available to any firm that may be interested in buying the division. For example, Alcoa has established an online showroom of the divisions that are for sale. By communicating the information online, Alcoa has reduced its hotel, travel, and meeting expenses.
Firms use transitional service agreements to increase the strategic benefits of divestitures.
Divestment execution includes five critical work streams: governance, tax, carve-out financial statements, deal-basis information, and operational separation.[6] Companies often create cross-disciplined teams composed of IT, HR, legal, tax, and other key business units, to implement a business separation.[7]
With economic liberalization of the Indian economy, India's Ministry of Finance set up a separate Department of Disinvestments.