Should Nike sell Converse? This is the type of a question that companies should ask more often. Firms love to acquire, but letting go of businesses they already own is usually a tougher decision. Yet the question behind a decision to buy or sell is fundamentally the same: is Converse more valuable under Nike’s ownership than the next best alternative? There are three components to this question: A) First, is Nike a competent owner for Converse when it comes both to operating the business, as well as preserving and growing its long-term value? B) Second, does the combination of Converse and Nike create more value together than the two companies do separately? C) Third, what is the value of Converse to Nike versus the value of Converse to the best alternative owner or as a standalone firm? Note that the three components are interdependent. It will be very challenging, if not impossible, for an incompetent owner to realize any synergies. Moreover, while strategic buyers tend to focus on synergies so much, they often forget the question of whether they can actually preserve the long-term value of the target. And when they aren’t competent owners, they often end up not only failing to realize any synergies, but also destroying the inherited value of the target. This is why you see so many failed deals end up with divestitures of targets at well below their initial acquisition price. And even if you create some value with a business combination, it can still lead to subpar or negative returns relative to valuation, cost of capital, hurdle rates. In most such situations, an optimal decision would be to divest. Finally, three interesting findings from research on divestitures. Firms that proactively both acquire and divest tend to generate the highest returns to their M&A activity. Yet at the same time, on average, firms tend to hold onto their underperforming acquisitions for too long, and exiting an underperforming deal often requires major change, such as CEO succession or severe underperformance. But when and why you sell matters, and in my own published research I show that, perhaps not surprisingly, firms divesting from a position of weakness realize much lower returns on their exits than firms divesting from a position of strength.