Divestment vs Disinvestment

One of the most common reasons for both is to raise capital. Other common reasons include social or political pressures from third parties. There is very little difference between divestment and disinvestment, and both achieve the same goal of reducing and not replenishing capital.

Divestment

When a company divests, the company disposes of part or all of its business. Divestments commonly occur when a particular division of a company does not live up to its expectations. This can result from financial reasons or because the division has violated the principles of the parent company. Another common reason for divestment is social pressure placed on a company conducting business in or with a country that has an unfavorable political climate.

Disinvestment

Disinvestment, also known as divestiture, occurs when an organization liquidates or sells part of its assets or an entire division without the intent of reinvesting in it. The divestiture typically occurs so that the organization can use the assets to improve another division. A disinvestment can occur with the sale of capital goods or closure of a division.