Profitable divesting

The management of a diversified corporation needs to be able to recognize new opportunities for profitable growth. And it also needs to know when one of its businesses is no longer compatible with long‐range growth plans. The symptoms may be a short‐term or long‐term lack of profit, a lack of fit, a need for cash, or a business with volatile year‐to‐year earnings that make it unattractive to Wall Street. However, once divestment comes into the picture, the first thing management needs to consider is, can the unit be sold without materially affecting its continuing lines of business.