According to the EY Global Corporate Divestment Study, the intent to divest remains at record levels – 84% of companies plan to divest within the next two years, consistent with last year’s record of 87%. At the same time, 63% admit they have held onto some assets for too long when they should have been divested. What steps can businesses take to improve divestment decisions, timing and follow-through?
Divestments have taken center stage as businesses across all sectors search for alternative growth and transformational strategies. Under a disciplined divestment strategy, knowing when candidates are “divestment ready” can help maximize the value of the divestiture and drive incremental value to the overall portfolio by actively monitoring the portfolio in real time. But divestment decisions – when viewed as part of portfolio optimization and not as a discrete business activity – need more than just knowing what assets to divest and when.
This is an iterative process. It requires frequent portfolio monitoring and assessment, as well as ongoing operational and performance improvements in preparation for sale, identification of potential suitors, establishing the deal perimeter, and understanding where best to reinvest the sale proceeds within the remaining business. Transaction analytics can play a key role in each of these steps, across the entire divestment life cycle.
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EY Law contacts:
Jean-Christophe Sabourin – EY Global Transaction Law Leader
Paula Hogéus – EY Global Labor & Employment Law Leader, Workforce Transformation Leader