What disadvantages do sellers face from the credit crisis, volatile stock markets and the recession? They have fewer buyers, more caution and lower deal multiples. In response, companies are exploring their options – like divestitures – as a way of raising cash, shedding debt and improving performance. Here we share some ideas on how you can make divestitures successful for your company.
Market dynamics have changed dramatically since the second half of 2007. The credit crisis, volatile stock markets, and recession have put sellers at a disadvantage: they face fewer buyers, more caution, and lower deal multiples. At the same time, those same market forces are exposing marginally performing businesses and are compelling companies to explore multiple options—including divestitures—as a way to raise cash, shed debt, or improve performance.
In such an environment, the onus is on the seller to get the deal done. It begins by understanding which dynamics have changed and how effective sellers are operating within the new constraints. The reality is that for the most part, the fundamentals of effective deal making haven’t changed; it’s just never been more important to apply them.