An effective purchase and divestiture strategy may double your company’s value. That’s what a review from Baignade & Firm found after studying several, 315 divestitures completed by 742 companies on the 20-year period.
The best divestors use a self-disciplined process to completely clean up the portfolio, sharpen strategic focus on core https://onlinedataroomtech.com/datasite-for-buy-side-ma-main-advantages/ business directions and generate more cash for investment within their remaining businesses. Additionally, they ensure they will extract maximum value from their divestiture simply by establishing distinct goals and a structured policy for the entire lifecycle of the deal—from identification through execution.
To spot divestiture marks, the best management teams apply two criteria: fit in and worth. By checking each organization unit, they determine if it’s necessary to positioning all their company for long-term expansion and profitability. And they assess if the business’s benefit would be higher if it had been separate from parent enterprise.
Once they’ve identified a target, the next thing should be to create an information memorandum and conduct an exhaustive search for purchasers. Ideally, this can be done in conjunction with the company’s M&A crew, which can carry a deep understanding of clients in different sectors and geographies.
The best divestors also recognize that a sale can leave behind stranded costs in the remaining stock portfolio, such as accounting systems, back-office functions or physical infrastructure built up to guide scale. They proactively keep track of these and also other longer-term costs and lay out a plan to minimize them, which often can provide a catalyst for broader company-wide shift.
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