TITLE : STRATEGIC DIVESTMENT.*

THE PURPOSE OF THIS BOOK iS to examine the art of letting go. Divestment is considered entirely within the context of the business community and solely as a business undertaking. The intent is to analyze both its theoretical and its practical structure: its motivations and objectives; the problems it involves, its advantages and disadvantages, and its mechanics and procedures. Case histories are used extensively to illustrate its various aspects.

To divest primarily means to strip of clothing, ornament, or equipment. From that arises its use in business: to deprive or dispossess, especially of property, authority, or title. This definition of the word emphasizes the purposes of this book-to investigate the dispossessing, ridding, or freeing of businesses, products, plants, distribution facilities, and various other assets owned by companies.

However, definition is as much what it is not as what it is. Divesting, as considered in this book, is neither the sale of the entire company nor the shutting down or closing of all or a portion of a company. The discussion of divesting has been limited to situations in which only part but not all of the firm's activities are divested. Following the divestment, the divesting company continues as a distinct, viable business entity. In fact, if the divestment is planned and implemented effectively, the divesting company realizes certain benefits or advantages that strengthen it as an operating unit. As for shutting down, discontinuing, or terminating a plant, product line, or other company activity, the action can be a response to the same set of problems or causes that might prompt divestment but is separate and distinct from a divestment. Accordingly, closing or shutting down is mentioned only in a general way as an alternative to divestment. One other point in connection with the definition of divestment should be noted. Divestment will be considered as a process or procedure and not simply as an isolated and discrete act.

The frequency of divestment occurrences has accelerated quite rapidly since the late 1960s, and Chapter I supplies the available statistics on divestment activity. To divest is a key management decision, and divestment is viewed in that light in Chapters 2 to 4. Those chapters deal with the objectives of divestment, the determination that a situation warrants divestment consideration, and the alternatives to divestment that must be examined. It bears repeating that divestment is not an isolated decision or occurrence but is instead part and parcel of a management decision-making process.

Diverting is also a procedure. A company must prepare for a divestment; it must select and contact prospective purchasers, and it must develop and negotiate the divestment transaction or package. Those topics are the subject of Chapters 5 to 9. Finally, a critical aspect of the success of any divestment is implementation. Chapters 10 to 12 touch on the implementation, particularly as it affects employee, customer, supplier, and community relations.

The book is intended to be a discussion of divestment useful to those who are directly involved in the divestment decision-the chairman, president, key vice presidents, financial officer, and major division and department heads-and also those who assist or advise management on divestment decisions from both within and without companies-planning personnel, accountants, consultants, bankers, and lawyers. It is designed to facilitate thinking and to broaden the approach to divesting, particularly as an important course of action open to a firm in certain situations. It has not been written as either a textbook or a guide to specific details or precise technical or procedural points.

Throughout, the book reflects my thinking and my personal experience with divesting in the course of my own business career. In several of the chapters, I express decided views on various phases of the divestment process. However, I have also included data from secondary sources on divestment frequency and examples that illustrate or emphasize certain characteristics of divestments. The results of a survey on corporate divestment mailed to over two hundred American companies are interspersed to develop certain points about divesting.

I am indebted to the American Management Associations and, particularly, Ernest Miller for their confidence and infinite patience. Also, I am grateful to Mort Lowenthal, Frank Brunetta, Linda Phillips, and Ann Miller for their comments and observations, for reading the earlier drafts, and for providing me with helpful, critical insights to substance as well as to clarity and organization.

I am especially indebted to Joan Perry, who gave invaluable assistance in the preliminary secondary research and also contributed to the organization of the book.

LEONARD VIGNOLA, JR.