Disinvestment

Disinvestment is the action of an organization or government selling or liquidating an asset or subsidiary. Absent the sale of an asset, disinvestment also refers to capital expenditure reductions, which can facilitate the re-allocation of resources to more productive areas within an organization or government-funded project. Disinvestment can be carried out for a variety of reasons, some of which are outlined below. Whether a disinvestment action results in divestiture or the reduction of funding, the primary objective is to maximize the return on investment (ROI) on expenditures related to capital goods, labour and infrastructure. Disinvestment is the action of an organization or government selling or liquidating an asset or subsidiary. Absent the sale of an asset, disinvestment also refers to capital expenditure reductions, which can facilitate the re-allocation of resources to more productive areas within an organization or government-funded project. Disinvestment can be carried out for a variety of reasons, some of which are outlined below. Whether a disinvestment action results in divestiture or the reduction of funding, the primary objective is to maximize the return on investment (ROI) on expenditures related to capital goods, labour and infrastructure.

Political and Legal Disinvestments:

Organizations may decide on the disinvestment of holdings that no longer fit with their social, environmental or philosophical positions. For example, the Rockefeller Family Foundation, which derived its wealth from oil, divested its energy holdings in 2016 due to false statements from oil companies regarding global warming.

Companies considered to be monopolies may be legally required to disinvest holdings to ensure fair competition. For example, after being found to be a monopoly after eight years in court, AT&T divested its seven regional operating companies in 1984. After disinvestment, AT&T retained its long-distance services, while the operating companies, referred to as the Baby Bells, provided regional services.