Mutual fund managers consistently rebalance their portfolio by selling stocks they perceive to be overvalued and buying shares of undervalued companies. Those who do this well frequently generate returns in excess of their peers.
Similarly, corporate executives should periodically evaluate their business and dispose of units that do not fit within or contribute to the core competencies of the company. Executives who do this well have historically generated higher shareholder returns than companies that do not pursue periodic portfolio pruning.
- The Importance of a Corporate Divestiture Program
- Types of Corporate Divestitures
- Special Factors to Consider in a Divestiture from a Legal, Accounting, HR and IT Perspective in a Corporate Divestiture