Building the Arsenal: Setting Up an Effective Separation Team and Governance

Abstract

Companies are increasingly turning to divestitures to shed noncore assets, generate cash, and satisfy investor demand to be nimble and focused. In a recent Deloitte survey, over 70% of executives said they expected to sell units or assets in 2017. The trend toward divestitures has been increasing, and research indicates they are likely to continue to be important to a company’s overall business and M&A strategy. Many companies have faced pressure to grow aggressively, which has made their operations more complex and may have stunted their ability to respond to dynamic market needs. As a result, executives are choosing to divest one or more business units, leading to an increase in parallel or serial divestiture deals over the past few years. Additionally, to succeed in a competitive marketplace, some companies are using divestitures as transformational catalysts to shed inefficient operations and optimize remaining business functions during deal execution.