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What is Divestment Option

Chapter 12
Handbook of Research on the Strategic Management of Family Businesses
The option to abandon owned assets permanently through their resale. Also referred to as abandonment option, its mechanism is equivalent to a put option.
Published in Chapter:
The Strategic Divestment Decision in the Family Business Through the Real Options and Emotional Lenses
Rania Labaki (EDHEC Business School, France) and Gérard Hirigoyen (University of Bordeaux, France)
Copyright: © 2020 |Pages: 36
DOI: 10.4018/978-1-7998-2269-1.ch012
Abstract
Divestments have received little attention in family business research, although representing one of the most important strategic and financial decisions. Additionally, they have been insufficiently studied from the owning family's emotional perspective. This chapter contributes in filling these gaps by focusing on the core entity of the family business as object of divestment from the Real Options and Regret theoretical lenses. It suggests a characterization of the family business divestment decision and a series of propositions with case vignettes around configurations of divestment options, their valuation, and influence in different emotional family business archetypes.
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