Restructuring and Divestitures

Abstract

Abstract Divestitures are major corporate restructuring transactions that narrow firm boundaries by removing one or more of a company’s businesses, subsidiaries, or divisions. Globally, divestitures account for about 30 to 40 percent of overall dealmaking activity and create more than double the shareholder value of mergers and acquisitions (M&A), their expansionary counterparts. Yet, restructuring and divestitures have been relatively understudied in the field of management. This chapter presents an agenda for research into the phenomena of restructuring and divestitures by surveying past and current literature about them and laying out some productive directions for future research in this domain. The core insight is that although divestitures are often seen as reactive solutions to problems within organizations, these transactions are and should be viewed by managers as proactive, strategic tools that have the potential to create significant value for the companies that undertake them.