There are thousands of factors that can derail a deal. Dealmakers have always used foresight, conviction and experience in building the blueprint for iron clad transactions. Yet, today’s deals are more closely scrutinized. They are being watched for a range of reasons and by a variety of key stakeholders – including activist investors, shareholders and regulators.
To dodge any potential deal-killers, savvy dealmakers are storyboarding all potential scenarios and options available to make sure their deals are value accretive to the organization and are likely to cross the finish line. One primary strategy dealmakers are increasingly relying on is preemptive divestitures (or proactive business segmentation in anticipation of a potential strategic action), which can help ease regulatory concerns, create liquidity and demonstrate to investors a company’s commitment to rigorous portfolio evaluation to create shareholder value.
Clients need to thoroughly understand their divestiture options and realize how they play into the bigger picture of a deal or strategic direction of the business. New technology, and especially the use of data and analytics, allows us to build scenarios for each one of these options. Armed with that knowledge, they can better navigate the challenges that may arise and consider broader options for improving their business through business development activities.
Here are three considerations for divestiture planning around a deal:
There’s a lot to consider when deals are under pressure and at risk of being stopped in their tracks. The key is to up the game on preparation before those cracks in the process begin to emerge and plan well ahead to strengthen a transaction’s odds of crossing the finish line.