When a business is looking to divest, they often have to consider the “remainder” of their assets. This might mean certain properties, shares, patents, or more. The term “remainder subject to divestment” is used to specify that the assets in question must be sold off in order to complete the transaction. It’s a legal term that generally applies to business transactions, particularly acquisitions and mergers.
To better understand what this means in practice, let’s take a look at an example. Imagine a company is looking to acquire another business. As part of the deal, the acquiring company will need to identify certain assets they are looking to acquire from the other business. They may be interested in the brand name associated with the business, or the patents associated with the products. Once that is established, they will then create an agreement specifying that all of those identified assets will be transferred to the acquiring company, and anything else remaining will be “remainder subject to divestment.”
This agreement will indicate that the assets in the remainder must be sold off or transferred to another party in order to complete the merger or acquisition transaction. It essentially prevents the organization from seeking to retain any assets that they have no use for or that they had no intention to acquire in the first place.
While “remainder subject to divestment” applies primarily to mergers and acquisitions, the concept can also be used in other kinds of transactions. It can be used to identify assets that must be sold in order to establish a trust, for instance, or to sell off assets that are not part of the main transaction. Regardless of the scenario, understanding what “remainder subject to divestment” means is essential for anyone involved in such transactions.