What is asset stripping in business?

This refers to the practice of buying an ongoing business with the aim of selling off its individual assets to buyers in the open market. Asset stripping usually happens when a business as an ongoing entity is no longer able to operate profitably and add value to its existing shareholders. In such cases, instead of incurring even more losses, it might be a better option for the shareholders to simply sell off its assets and realise the business’ salvage value. Many businesses, however, are saved from liquidation by investors who are willing to purchase it with high hopes of turning it around into a profitable operation.