Net Cash from Acquisitions & Divestitures

Category

Cash Flow

Units

Currency

Formula

Cash from Divestitures − Net Cash Paid for Acquisitions

US-GAAP elements

PaymentsForProceedsFromBusinessesAndInterestInAffiliates

Reference

ASC 230, Statement of Cash Flows (investing activities); ASC 805

Source

Reported in SEC EDGAR filings (US-GAAP XBRL taxonomy)

Net cash from acquisitions and divestitures is the combined cash effect of a company buying and selling businesses during a period: cash received from selling subsidiaries, divisions, and interests in affiliates, minus cash paid to acquire businesses and affiliate stakes, each typically net of the cash the businesses held. It sits within the investing section of the cash flow statement.

A negative figure means the company was a net buyer of businesses. A positive figure means it raised more from sales than it spent on purchases.

ASC 230 generally requires acquisitions and divestitures to be shown on separate lines, so this figure is usually calculated from figures reported in SEC filings. A company that presents a single net line may use the XBRL element PaymentsForProceedsFromBusinessesAndInterestInAffiliates. That element is framed as a payment, so a positive XBRL value is a net outflow, the reverse of the sign convention used in this measure.

The inputs share the same boundaries. Both sides count only cash consideration: stock issued to buy a company, or shares or notes received when selling one, are noncash and excluded. Buying out noncontrolling owners of an existing subsidiary is a financing activity, and selling a minority stake while keeping control is also financing, so neither appears here. Individual asset purchases and sales, such as equipment, are reported separately even when large.

This measure summarizes how actively a company is reshaping its portfolio. A conglomerate selling non-core units to buy businesses in a new area may show modest net figures while turning over a large part of its revenue base, so it is worth looking at both gross sides as well as the net. Over several years, cumulative net acquisition spending compared with free cash flow shows whether a company is funding growth by deal-making, and whether the goodwill it records is producing matching returns.