A divestiture is “the action or process of selling off subsidiary business interests or investments.”
Businesses that divest some of their company may do so by promoting a subsidiary or even a separate company that works under the parent firm . Divestitures are typically in the context of large publicly-traded corporations since they have more business units and are more likely to engage in acquisitions of businesses outside their industry.
Divestitures may occur for a number of reasons including bankruptcy, to raise money, boost performance, etc.
A divestiture can be seen as a means of creating value for companies in the mergers, acquisitions, and the consolidation process.
