Lee Dranikoff is an Associate Principal, Tim Koller is a Principal, and Antoon Schneider is an Engagement Manager at management consultancy McKinsey & Company. This article was published in the May 2002-issue of the Harvard Business Review. Research into 200 largest US corporations from 1990 to 2000 shows that those companies actively managing their business portfolios through acquisitions and divestitures create substantially more shareholder value than those that passively hold their businesses. The research also showed that there was a strong bias against divestiture and that acquisitions are more common than divestitures. In addition, most large divestitures are reactive rather pro-active. So what are the costs of holding on to a business? There are costs to the entire corporation, but also to the unit itself. Both these costs are discussed in detail. So what can corporations do? The authors introduce a five-step process: (1) Prepare the organization; (2) Identify candidates; (3) Structure the deal; (4) Communicate the decision; and (5) Create new businesses. General Electric's divestiture strategy is used a major example. In this intriguing article, the authors argue that executives spend too much time creating and acquiring businesses and not devoting enough attention to divesting them. The result is that they often end up selling businesses too late and at too low a price. And I must admit that I believe it is true that too many of us overlook the potential of divestiture. The authors use simple business US-English. Highly recommended to executives and senior managers.