Corporate divestitures from strategy to execution - Four guiding principles to optimize

February 2012
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Corporate divestitures from strategy to execution - Four guiding principles to optimize

At a glance

Amid ever-changing deal dynamics and market conditions, transaction preparation and value generation are more important than ever. Successful corporate divestitures now demand diligent preparation. Sellers must understand all aspects of their business and address issues in advance to speed up the sales process and preserve value. Following a few guiding principles when preparing for a sale will assist sellers in successfully exiting their business in a shorter timeframe and effectively optimize sale value.

With the financial markets more challenging than ever before, careful preparation has become imperative for companies looking to divest. Over the last several years, the frenzied deal market often saw a reduced level of buyer due diligence as a result of the high competition for businesses. Now, in this much tougher deal market, with a smaller pool of likely buyers and increased demands from banks, the need for extensive buyer due diligence has increased and is expected to further lengthen deal close times.

More than perhaps ever before, the burden will be on the seller to prepare for what a buyer will need to know, or risk the deal falling through, not achieving their asking price, or a much extended deal timetable.This paper provides sellers with guidance on how to use a successful divestiture process to prepare a business for sale. Regardless of the reason for the need to divest, by using a strong divestiture process, sellers can successfully exit their businesses in as short a timeframe as possible, avoid erosion of the sale price at the negotiating table, and — ultimately — maximize their sale price.