Partial Divestment and Firm Sale under Uncertainty
نویسنده
چکیده
This paper studies optimal divestment policy of an investor in a rm that may partially and gradually divest its capital or sell the whole rm at once. Partial divestment o¤ers greater exibility while a whole- rm transaction provides a price premium. We show that, if the price premium includes both a xed and a proportional component, a large rm optimally starts to divest partial capital before choosing to sell the whole- rm. Full- rm divestment is preferable over partial divestment with higher pro t volatility, in more declining markets and if capital is less industry-speci c.
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