Asset Stripping
Private Equity glossary · Private Equity Fundamentals
Definition
Selling individual divisions or assets of an acquired company to repay debt or generate returns, sometimes pejoratively associated with early-1980s buyouts.
Asset Stripping in plain English
Asset stripping means buying a company and then selling off its pieces — a division here, a warehouse there, a valuable brand somewhere else — often to raise cash and pay back the money borrowed to buy it. Imagine buying a whole house at auction, then selling the appliances, the furniture, and finally the land separately because the parts are worth more than the house as a whole. It got a bad reputation in the 1980s because some buyers did this ruthlessly, gutting companies and firing workers just to pocket the difference. It's not always harmful, but the word usually carries a critical tone.
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