Research On The Performance Of The Divestiture Of A Company's Environmental Machinery Industry

In order to disperse risks,more and more enterprises have diversified operation.But with the expansion of scale and the increase of management level,the economies of scale brought about by diversification are gradually offset by the loss of inefficient management and decentralization of resources.Therefore,asset divestiture appears in the capital market gradually,and this has aroused the attention of enterprises and investors.Asset divestiture is a measure by which an enterprise sells some of its current subsidiaries,departments or fixed assets to other companies to obtain cash or other assets in return for fulfilling its strategic objectives.With the increase of divestiture cases,the study of divestiture motivation and divestiture performance will help enterprises to make better strategic choices and create value.This paper uses qualitative and quantitative research methods to study the performance of company A in construction machinery industry by combining domestic and foreign research literature.Firstly,according to the background and implementation of the divestiture,the reasons for the divestiture of A company's assets are as follows: strengthening core business,realizing financing demand and improving operating efficiency.Then,from the perspective of valuation and future development,the reasons why they choose environmental industry as their target are analyzed.Next,from the perspective of market and finance,the performance of A company before and after the divestiture of environmental industry is compared and analyzed.From the market point of view,the CAR and BHAR are analyzed by event study method.From the financial point of view,using DuPont analysis and cash flow index analysis,it is concluded that the divestiture of A company's assets has achieved its divestiture goal: the construction machinery industry revenue has increased substantially,cash flow has improved,financial risk has been reduced,management efficiency has been improved,etc.However,there are still some gaps compared with the industry,which need to arouse the attention of management and take measures to successfully complete the strategy of focusing on the main industry.Finally,according to the case study of A company's environmental industry divestiture,the paper summarizes the experience: Firstly,the enterprise should make strategic choices,whether to expand or refine,according to its own characteristics and macro-environment,the motivation of asset divestiture should be fully combined withstrategic objectives;Secondly,regarding the choice of divestiture scheme,we should fully consider the divestiture object and the assignee to achieve the divestiture goal and win-win situation;Thirdly,after the stripping,it should be supervised and evaluated comprehensively in order to continue to optimize and make the stripping effect better.