The New Alchemy: Divestment for Profit

We are all very familiar with the concept of “cash cows,” “dogs,” “stars,” etc., and can cite chapter and verse on the necessity of getting rid of the dogs. In a growing number of corporations, management has successfully operationalized this lesson, and divestments are handled in a fashion that works toward maximizing the value of the firm. At the other end of the spectrum, there are many firms whose management is reluctant or even unable to approach the divestment decision on a purely business footing. Moreover, for these firms, even once the decision to divest is made, the sellers usually leave money on the table. This article lays out a framework to help management ensure that they do, in fact, receive top dollar for their divestments.