asset stripping

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A pejorative description of the process of dividing up the assets of a company in cases where the total value of the parts when separated is greater than their value when combined. Examples could include selling off unused or under-utilized land or buildings, or selling off activities where heavy investment carries tax allowances which the company cannot use to other companies whose large present profits make the tax allowances valuable to them. A more favourable description of asset-stripping activities is corporate restructuring. Advocates of corporate restructuring argue that asset-stripping is only profitable because the assets were being inefficiently used, or simply neglected, in the first place.

Subjects: Economics.

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