Which one of these is the least probable reason why a firm may want to divest...

Which one of these is the least probable reason why a firm may want to divest itself of some of its assets?

To cash out a profitable operation
To raise cash
To improve the strategic fit of its various divisions
To comply with antitrust regulations
To increase market share

Expert Solution

Divestment is done to remove a division which is a part of the business's non core operations and thus focus completely on it's core business. It is also done to remove a non -profitable division from the business, remove a division which is not strategically fit and removing it might improve the strategic fit of other divisions. It also can be used to increase the market share and to comply with the anti trust regulation by divesting those divisions which do not comply with the regulations. It helps to generate cash by selling of its divisions which are not performing well or not in sync with the current operations. Divestment is also done to increase market share, if the existing market share is too small.

Divestiture never removes the profitable operations and generates cash out of it, it is done to remove the unmanageable, unprofitable and unrelated division.

So, the correct option is option A.

jeff jeffy answered 2 years ago

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