Divestiture

A divestiture is the sale or disposal of part of a company's business, such as a division, a product line or a stake in another company. It is the opposite of an acquisition.

Companies divest to focus on their strongest businesses, to raise cash to pay down debt, or because a regulator requires it as a condition for approving a merger. The cash a sale brings in shows up in the investing section of the cash flow statement.

After a divestiture, past results include a business the company no longer owns, so growth comparisons can mislead until the figures are restated. Check whether the price was a good one and what the company plans to do with the money.