Asset Stripping


DEFINITION of 'Asset Stripping'

The process of buying an undervalued company with the intent to sell off its assets for a profit. The individual assets of the company, such as its equipment and property, may be more valuable than the company as a whole due to such factors as poor management or poor economic conditions.

BREAKING DOWN 'Asset Stripping'

For example, imagine that a company has three distinct businesses: trucking, golf clubs and clothing. If the value of the company is currently $100 million but another company believes that it can sell each of its three businesses to other companies for $50 million each, an asset stripping opportunity exists. The purchasing company will then purchase the three-business company for $100 million and sell each company off, potentially making $50 million.

  1. Invisible Assets

    An item of value that is intangible and that cannot be seen, ...
  2. Asset Stripper

    An individual or company, which purchases a corporation with ...
  3. Sum-Of-Parts Valuation

    Valuing a company by determining what its divisions would be ...
  4. Asset

    1. A resource with economic value that an individual, corporation ...
  5. Valuation

    The process of determining the current worth of an asset or company. ...
  6. Asset Valuation

    A method of assessing the worth of a company, real property, ...
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