Disinvestment

Disinvestment is the sale or disposal of an asset. This step may be taken for many reasons, including the following:

  • To improve the return on assets by shrinking the total asset base of the entity

  • To raise cash from the sale of assets

  • To create more floor space, which can be reallocated or used as part of an overall reduction of floor space

  • To eliminate an asset that has an associated legal or risk liability

  • To concentrate management attention on a reduced number of product lines

Disinvestment may be accomplished by selling, scrapping, donating, or spinning off an asset. In the last case, a business may spin off a subsidiary or group of assets to shareholders.