INTERNATIONAL JOURNAL OF ENGINEERING MANAGEMENT AND
SOCIAL SCIENCES

THE IMPACT OF CORPORATE RESTRUCTURING THROUGH DIVESTMENTS AND MANAGEMENT BUYOUTS (MBOs)

Corporate restructuring is a strategic mechanism through which firms reshape their business portfolios, ownership structures, and allocation of capital in response to changing competitive conditions. Two important restructuring mechanisms are divestments and management buyouts (MBOs). Divestments involve the sale, spin-off, or separation of a business unit or asset, while an MBO transfers ownership or control of a business to its existing management team, often with external financing. This paper examines how these two mechanisms can influence corporate performance, strategic focus, managerial incentives, financial flexibility, and shareholder value. The study adopts a systematic literature-based research design using published academic research and secondary evidence on corporate divestitures and management buyouts. The literature indicates that divestments can create value when they improve strategic focus, release capital from non-core assets, reduce organizational complexity, or permit a business unit to operate under a more suitable ownership structure. Evidence on MBOs similarly suggests that stronger managerial ownership and incentives can improve operating performance, although outcomes vary with leverage, governance, transaction selection, and post-buyout strategy. The paper develops a comparative framework showing that divestments and MBOs are not automatically value-enhancing; their success depends on strategic rationale, transaction design, valuation discipline, stakeholder management, and post-transaction execution. The study concludes that corporate restructuring should be evaluated as a strategic portfolio decision rather than merely as a financial transaction.