Define: Divestiture

UK Accounting Glossary

Definition: Divestiture


Quick Summary of Divestiture


An order to an offending party to rid itself of property; it has the purpose of depriving the defendant of the gains of wrongful behaviour.



What is the dictionary definition of Divestiture?

Dictionary Definition


  1. The act of divesting, or something divested
  2. The sale or liquidation of a subsidiary company, especially if forced by some governing authority

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Full Definition of Divestiture


Divestiture is the sale or disposition of a business by a company and may occur for various reasons. Sometimes a divestiture results simply from a company’s desire to rid themselves of a poorly performing business. In other cases, a company will decide a business no longer fits its strategic objectives and is thus a suitable candidate for divestiture. More positively, a divestiture may result from a company’s decision that it can maximize shareholder value from a successful business by letting it stand alone (although in this case “spinoff” is more commonly used than divestiture).

A divestiture may also result from a court order, such as the divestiture of ATT of its local operating subsidiaries in the 1980s. A corporate divestiture often requires the services of an investment bank to assure the best price is achieved for the asset. From an accounting viewpoint, a divestiture may be categorized as discontinued operations, which requires special accounting treatment.


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Examples of Divestiture in a sentence


The court found divestiture to be necessary in preventing a monopoly.



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Divestiture. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. April 02, 2020 https://payrollheaven.com/define/divestiture/.
Chicago Manual of Style (CMS):
Divestiture. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/divestiture/ (accessed: April 02, 2020).
American Psychological Association (APA):
Divestiture. PayrollHeaven.com. Retrieved April 02, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/divestiture/

Definition Sources


Definitions for Divestiture are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 9th February 2020.