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In the arena of mergers and acquisitions (M&A), acquisitions tend to attract the most fanfare and enthusiasm within participating organizations. Yet, corporations also divest business units with surprising frequency. Divestitures accounted for more than one-third of all M&A activity from 2002 through 2006, averaging well over 3,000 transactions annually during that period, with an average value of $175 million, according to the Mergerstat Review 2007. Divestiture transactions also present unique challenges to the seller and, despite their prevalence, relatively little professional guidance is available to assist financial managers involved with them.

Key Differences: Difficulty and Risk

If you're exposed to corporate divestitures, it's easy to characterize them simply as mirror images of acquisitions. In reality, there are material timing, communication and management differences between the two types of corporate transactions. See here for more.

This has been excerpted from the Journal of Accountancy.