2015 | ey.

com/divest

Global
Corporate
Divestment Study
Closing the deal: strategies
to increase speed and value

A note from Paul Hammes,

EY Global Divestiture Advisory Services Leader
Leading companies view divestments as a fundamental part of their capital strategy, especially to fund
growth. More than half of the companies surveyed for our latest EY Global Corporate Divestment Study
expect the number of strategic sellers to increase in the next 12 months.
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A note from Steve Krouskos,

EY Global Deputy Vice Chair, Transaction Advisory Services
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at the center of a company's growth strategy. Why is this? Because divestments are vital to portfolio
optimization they are at the heart of funding future business growth. Letting go is how a company grows.
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C]qf\af_k
Companies often struggle to get the right information to make good portfolio decisions and
to balance speed with value when selling assets. Here are the highlights of our 2015 Global
Corporate Divestment Study:

Why you should consider divesting

74%
g^jekYj]mkaf_
divestments to
fund growth

66%
saw an increased
valuation multiple in the
remaining business after
their last divestment

How you can increase shareholder value

55%
say they need better
analytics tools to improve
portfolio reviews

Companies can learn

value creation
lessons from

private equity

How to increase speed and certainty

Preparation shortcuts
elongate diligence and

delay time to close

50%
of executives completed
their deal on time by starting
preparations earlier

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Three success
criteria met

19%

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One success
criteria met

No success
criteria met

19%
of sellers are high performers who meet
three key success criteria

34%

Two success
criteria met

34%

13%

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Which triggers prompted your most recent divestment?

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12%
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57%

46%

16%
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45%
16%
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44%
9%
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43%
7%
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40%
15%
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39%
8%
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34%
2%
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29%
14%

Consideration

How did you use the funds raised from your most
recent divestment?
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74% used
divestments
to drive growth

12%
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34%

14%

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17%
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23%
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45% of executives say

shareholder activism
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decision to divest

Most important

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would lead us in the right direction and help us capitalize on
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could shift our focus and switch back as needed.
Executive at a Germany-based automotive company

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What do you expect to see in the divestment market

over the next 12 months?
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9%

37%

54%

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22%

36%

42%

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22%

32%
Decrease

46%
Stay the same

Increase

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50%

of executives say that closing deals quickly

and with certainty is more important than
waiting longer to secure a higher price.

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What would make your portfolio review

process more effective?
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58%

14%
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56%

13%

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Understand business unit cost allocations

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52%

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50%

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8%

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25%
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Consideration

Most important

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Use the right industry benchmarks

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Run regression models based on sales-to-investment.
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afhja[af_$Y\n]jlakaf_$hjgeglagf$affgnYlagfYf\
gl`]j^Y[lgjkkgqgmcfgoo`]j]lg^g[mk[YhalYd&
9fYdqr]fgf%fYf[aYde]lja[k&;gehYfa]kemklmk]Za_
\YlYl][`fgdg_qlgj]Y[`fgf%ljY\alagfYd\YlYkgmj[]k&>gj
]pYehd]$kg[aYde]\aYkgmj[]keYqj]n]Ydl`Ylhjg\m[lkYj]
Z]af_j][]an]\\a^^]j]fldqafl`]eYjc]ll`YfYfla[ahYl]\&
L`]k]lggdkYj]]^^][lan]fglgfdq^gjhgjl^gdageYfY_]e]fl
ZmlYdkg^gj[j]Ylaf_Ykljgf_$kmhhgjlYZd]nYdm]klgjql`Yl
]f`Yf[]kkYd]hja[]Yf\]ph]\al]k\ada_]f[]&

55%
of executives say business analytics would
make their portfolio reviews more effective

How big data can help you make portfolio

decisions and prepare for a divestment
:a_\YlYak[geegfdq\]f]\afl]jekg^^gmjNk
ngdme]$nYja]lq$n]dg[alqYf\n]jY[alqYf\akhj]k]flaf
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\an]kle]fl$qgm[Yfmk]Za_\YlYlg2
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]&_&$eafaf_kg[aYde]\aYlgmf\]jklYf\hjg\m[l
gjZjYf\h]j[]hlagfkYf\[mklge]jkYlak^Y[lagf!
Mf\]jklYf\c]qZmkaf]kk[q[d]kZqmladaraf_
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=ehdgqY\][akagf%eYcaf_^jYe]ogjc
ZYk]\gf\YlYk[a]f[]lgj]Y[`YfgZb][lan]
na]og^YkljYl]_a[hgjl^gdag
A\]fla^qhgl]flaYdkqf]j_a]kYf\\ak%kqf]j_a]k
Zqmladaraf_dYj_]j\YlYk]lk

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Fglgfdq\gj]_mdYjhgjl^gdagj]na]ok`]dh[gehYfa]k
eYc]Z]ll]j%af^gje]\\][akagfkYf\]ph]\a]flhgjl^gdag
k`a^lk$Zmll`]qYdkgaehjgn]afl]jfYd[ggh]jYlagfj]dYl]\
lg\YlY_Yl`]jaf_Yf\[gfk]fkmkZmad\af_Yjgmf\Y[lagfk&
;gf\m[laf_hgjl^gdagj]na]okloa[]Yq]Yjaka\]Yd&
J]_mdYjj]na]okaehjgn]afl]jfYd\qfYea[kaflogc]qoYqk&
>ajkl$l`]qZ]ll]jhj]hYj]l`]E9l]Yelgaehd]e]fl
ZgYj\'kljYl]_ql]Ye\][akagfk&>gj]pYehd]$a^YZmkaf]kkak
hmlgfYoYl[`dakl$l`]E9l]Ye[Yf`Yn]egj]d]Y\lae]
lghj]hYj]l`]Zmkaf]kk^gjkYd]2*-g^]p][mlan]kkYql`Yl
Z]ll]j[geemfa[YlagfZ]lo]]fl`]ZgYj\'kljYl]_qYf\E9
l]Yeogmd\aehjgn]hgjl^gdagj]na]o]^^][lan]f]kk&
K][gf\$^j]im]flhgjl^gdagj]na]okYj]na]o]\Zq]ehdgq]]k
Yf\k`Yj]`gd\]jkYkYfgZb][lan]]p]j[ak]lg[j]Yl]
klYc]`gd\]jnYdm]&:q[gfljYkl$af^j]im]flj]na]ok[Yf
]Y[`Z]k]]fYkYka_fg^Yhgl]flaYd\an]kle]fl$d]Y\af_
lgjmegjk$mf[]jlYaflq$j]\m[]\]ehdgq]]egjYd]Yf\
o]Yc]jkmhhda]jgj[mklge]jj]dYlagfk`ahk&L`]eYbgjalqg^
]p][mlan]kY[cfgod]\_]l`]f]]\^gjegj]^j]im]flj]na]ok$
o`ad]+1kYql`Yl_j]Yl]j[gf\]flaYdalqg^f\af_k$lgg$
ogmd\eYc]j]na]okegj]]^^][lan]&

25%
say that better communication between
the board/strategy and M&A team would
improve portfolio review effectiveness.

39%
kYql`Yl_j]Yl]j[gf\]flaYdalqg^f\af_k
would make reviews more effective.

Frequent portfolio reviews help us assess every business

unit at equal intervals and on set targets. This makes
management more aware about the businesss actual
hjglYZadalq$Yf\f][]kkYjq[`Yf_]k[YfZ]eY\]ja_`lYoYq&
Executive at a US-based consumer products company

O`YlnYdm][j]Ylagfd]kkgfk[Yf
qgmd]Yjf^jgehjanYl]]imalq7
HjanYl]]imalq H=![gflafm]klggmlh]j^gje[gehYjYZd]hmZda[[gehYfa]ko`]fal[ge]klg
[j]Ylaf_nYdm]$Y[[gj\af_lg=Qkegklj][]flHjanYl]=imalqNYdm];j]YlagfKlm\q&Fglgfdq\a\
MKH=hgjl^gdag[gehYfa]kY[`a]n]]imalqj]lmjfk,&,pl`gk]g^kaeadYjhmZda[dqdakl]\[gehYfa]k
^gjl`]kYehd][gehd]l]\Z]lo]]f*((.Yf\*()+$ZmlH=kkljYl]_a[Yf\gh]jYlagfYd
aehjgn]e]flk`Yn]Z]]fYc]qh]j^gjeYf[]\jan]j&
Sources of annual EBITDA growth
in the US, 2006131
0.8%

kYd]$[gehYfa]kk`gmd\j]YhhjYak]l`gk]_ma\]daf]klg
\]l]jeaf]a^Y\\alagfYd^g[mk[gmd\lgd]Y\lgaf[j]Yk]\
kYd]nYdm]&

0.2%

4.7%

4.6%

Organic revenue growth

Cost reduction

8.6%

Bolt-on acquisitions

18.9%

Disposals

Other

O`ad][gjhgjYl]k]dd]jkeYqgjeYqfgl`Yn]l`]kh][a[lae]
[gfkljYaflkg^H=\]h]f\af_gf`gol`]qeYfY_]l`]aj
hgjl^gdagkl`]q[Yfkladdd]YjfnYdm][j]Ylagfd]kkgfk^jgeH=&
9f\alkogjl`fglaf_l`Yll`]k]d]kkgfk[Yf`]dh[j]Yl]nYdm]
afYZmkaf]kkmfalo`]l`]jgjfglalakZ]af_hj]hYj]\^gjkYd]&

KlYjl]YjdqlgZmad\
kmklYafYZd]_jgol`
H=cfgokl`YlZmq]jk]p`Ymklan]dqk[jmlafar]afn]kle]fl
ghhgjlmfala]k&Kgk`gjl%l]jej]n]fm]afYlagfYf\[gkl
[mllaf_\gfglhYkkl`akl]kl&JYl`]j$H=^g[mk]kgfdgf_%l]je
kmklYafYZd]_jgol`&H=jekg^l]fhdYf^gj$Yf\]p][ml]gf$
gh]jYlagfYdaehjgn]e]flkq]YjkafY\nYf[]g^Yf]pallg
[j]Yl]kmklYafYZd]h]j^gjeYf[]Yf\ege]flmel`Yle]jal
`a_`]jnYdmYlagfk&

If you have 12-24 months before

you prepare for a sale, focus on:
Treating the business as a standalone entity.;gehYfa]k
lqha[YddqYhhdqYfmeZ]jg^c]qh]j^gjeYf[]af\a[Ylgjklg
Zmkaf]kkmfalko`]fl`]q\][a\]o`]l`]jgjfgllgeYc]
afn]kle]flk ]&_&$eYj_afl`j]k`gd\kgjj]lmjfk$hYqZY[cgf
[YhalYdafn]kle]fl!&O`]fYZmkaf]kk`YkZ]]f]YjeYjc]\^gj

10

Enhancing revenue.L`]dYl]kl=QHjanYl]=imalqNYdm]
;j]YlagfKlm\qj]n]Ydkl`Ylf]Yjdq`Yd^g^nYdm]gn]jl`]da^]
g^Yfafn]kle]flak[j]Yl]\l`jgm_`j]n]fm]]f`Yf[]e]fl&
Af[dm\af_l`]gl`]j`Yd^$o`a[`akZjgc]f\gofZ]lo]]f
afgj_Yfa[_jgol`Yf\[gklkYnaf_k$l`]k]nYdm][j]Ylagf
afalaYlan]k`Yn]j]kmdl]\afYfYffmYd=:AL<9af[j]Yk]g^
f]Yjdq)1&
O`ad]Yf]pl]fkan]hjg\m[l]phYfkagfhjg_jYe[gmd\Z]
mfj]Ydakla[^gjYZmkaf]kkl`Yl`YkZ]]f]YjeYjc]\^gjkYd]$
[gehYfa]k[YfklYjllgghlaear]l`]ajhjg\m[l^gglhjaflY[jgkk
[mklge]jkYf\_]g_jYh`a]k&9Zgd\]jegn][gmd\Z]lgY\\
hjg\m[lkgj]phYf\aflg\a^^]j]fl_]g_jYh`a]kgjeYjc]lk
l`jgm_`Ybgafln]flmj] BN!YjjYf_]e]fl&O`ad]alakaehgjlYfl
lg`Yn]YBN]palkljYl]_q$YBN[Yfhjgna\]Y[j]Ylan]kgdmlagf
Yf\Yhgl]flaYde][`YfakeZqo`a[`qgm[Yfaf[j]Yk]hja[]k
gfj]dYl]\hjg\m[lk&K]dd]jk[gmd\Ydkg[gfka\]jY[imajaf_Yf\
afl]_jYlaf_Yfgl`]j[gehYfq&

Principal drivers of organic revenue growth

in the US, 2007131
?jgol` k`jafcaf_!
afeYjc]l\]eYf\

?]g_jYh`a[Yd
]phYfkagf
21%

Price
increases

23%

6%
13%

;`Yf_]g^
g^^]jaf_

22%
15%

Aehjgn]\
k]ddaf_

New
hjg\m[lk

Source: EY Private Equity Value Study, 2014

Few executives extracted

working capital, but most said
l`]qogmd\`Yn]Z]f]l]\
from doing so

;gjhgjYl]]p][mlan]k_an]]imYdo]a_`llgl`]aehgjlYf[]g^
Zggklaf_j]n]fm]Yf\j]\m[af_[gklklg]f`Yf[]nYdm]l`]
logkl]hko]j]mf\]jlYc]f]imYddqg^l]fYf\[al]\Zq,(g^
l`gk]o`gmf\]jlggcl`]eYkl`]ajegklaehgjlYflafalaYlan]&
?an]fH=kkm[[]kkaf[j]Ylaf_kmklYafYZd]nYdm]Zq^g[mkaf_
gfj]n]fm]$h]j`Yhkegj][gjhgjYl]kf]]\lgk`a^ll`]aj^g[mk
lgoYj\l`]lghdaf]&
Extracting working capital. ;gehYfa]kg^l]ff]_d][l
l`akaehgjlYflnYdm][j]Ylagfd]n]jgfdq+- l`]dgo]kl
h]j[]flY_]!g^]p][mlan]k\a\al&@go]n]j$]pljY[laf_
ogjcaf_[YhalYdoYkk]d][l]\egklg^l]f *)!Ykl`]kl]h
l`Yl[gehYfa]k\a\fgllYc]ZmlZ]da]n]l`]qogmd\`Yn]
Z]f]l]\^jgel`]egkl&@]j]alakY\nakYZd]lg^gddgol`]
d]Y\g^H=$o`a[`g^l]f]pljY[lkogjcaf_[YhalYdlgj]afn]klaf
_jgol`Yj]Yk&
L`]hjgZd]eakl`YlZmq]jk_]f]jYddqogflhYq^gj]p[]kk
ogjcaf_[YhalYd&;gehYfa]khdYffaf_lg\an]klYZmkaf]kkf]]\
gfdq]fgm_`ogjcaf_[YhalYdlgjmfl`]Zmkaf]kkgfY\Yq%lg%
\YqZYkak&Egj][Yk`l`Yfl`Ylk`gmd\Z]hmllgogjchjagjlg
kYd]&>g[mkaf_gfl`akg^l]fdgo%`Yf_af_^jmaloaddYdkg[Ymk]
^]o]j\akjmhlagfkl`Yf\a^[mdl[gkl%[mllaf_\][akagfkj]dYl]\lg
h]jkgff]dgjkmhhda]jk&
Cutting costs through procurement.;gehYfa]k[Yf]fl]j
aflg_jgmhhmj[`Ykaf_gj_YfarYlagfk$gj]n]f^gjel`]ajgof
Zmq]j[gfkgjlaY$lgj]\m[][gklkYf\]f`Yf[]eYj_afk&

If you have limited time less than 12

months before you start preparing for sale:
NYdm][j]Ylagfghlagfk^gj]f`Yf[af_kYd]hja[]Yj]fYjjgo]j
afl`akk`gjllae]^jYe]Z][Ymk]l`]Zmq]joaddoYfllgcfgo
l`YlnYdm][YfZ]j]Ydar]\Yf\kmklYaf]\gn]jl`]dgf_l]je&A^
l`]k]dd]j[Yffgl^mddqaehd]e]fll`]nYdm][j]YlagfafalaYlan]k$
alk`gmd\Yld]Ykl\]n]dghY\]lYad]\jgY\eYhl`Ylaf[dm\]k
]ph][l]\afn]kle]flkYf\]p][mlagfhdYfk&

Which of the following pre-sale value creation

initiatives did you undertake?
Ghlaearaf_d]_Ydkljm[lmj] ]&_&$hmllaf_[Yjn]\%gml
Ykk]lkaflgYf]od]_Ydkljm[lmj]!
66%

20%
Ghlaear]\l`]lYpkljm[lmj]

64%

20%
Gh]jYlagfYdaehjgn]e]flklgj]\m[][gklk'aehjgn]eYj_af
40%

63%

=f`Yf[af_j]n]fm] ]&_&$hjg\m[l
aehjgn]e]flgj\akljaZmlagf]phYfkagf!
62%

40%
Gh]jYlagfYddqk]hYjYlaf_l`]Zmkaf]kkhYjlaYddqgj^mddq
57%

25%
=pljY[laf_ogjcaf_[YhalYd
29%
Undertook

35%

Most important for enhancing value

Which step did you not do but now feel you

ogmd\`Yn]Z]f]l]\^jgel`]egkl7
=pljY[laf_ogjcaf_[YhalYd
21%
Gh]jYlagfYdaehjgn]e]flklgj]\m[][gklk'aehjgn]eYj_af
19%
=f`Yf[af_j]n]fm] ]&_&$hjg\m[laehjgn]e]fl
gj\akljaZmlagf]phYfkagf!
19%
Ghlaearaf_l`]lYpkljm[lmj]
16%
Gh]jYlagfYddqk]hYjYlaf_l`]Zmkaf]kkhYjlaYddqgj^mddq
16%
Ghlaearaf_d]_Ydkljm[lmj] ]&_&$hmllaf_[Yjn]\%gml
Ykk]lkaflgYf]od]_Ydkljm[lmj]!
8%

11

Kge]afalaYlan]kl`YleYq`Yn]Y_j]Yl]j[`Yf[]g^Y\\af_
nYdm]j]dYlan]dqima[cdqaf[dm\]j]f]_glaYlaf_oal`n]f\gjk$
j]\m[af_\akljaZmlagfYf\K?9[gklk$]pljY[laf_ogjcaf_
[YhalYdYf\k]ddaf_g^^j]Yd]klYl]&

Fgk][j]lkYm[]
L`]H=hdYqZggc\g]kfgl`Yn]mfaim]d]n]jklghmdd&H=
^g[mk]kgfnYdm][j]YlagfZqZ]af_\ak[ahdaf]\oal`hdYffaf_$
e]Ykmjaf_$Y[[gmflYZadalqYf\j]oYj\af_Y[`a]n]e]fl&L`ak
YhhjgY[`[j]Yl]kY_j]Yl]jk]fk]g^mj_]f[qYf\eYfY_]e]fl
^g[mkgfnYdm][j]YlagfafalaYlan]k&
Governance model. H=gof]jklYdclgeYfY_]e]fl
^j]im]fldq&Afl`][gjhgjYl]ogjd\$o]km__]klegj]
^j]im]flYf\Y[lagf%gja]fl]\e]]laf_klgaf[j]Yk]
Yll]flagfgfnYdm][j]Ylagf&;gjhgjYl]gj_YfarYlagfk
Ydkgk`gmd\eYc]gZb][lan]\][akagfkZYk]\gfjgZmkl
af^gjeYlagf$afkl]Y\g^d]llaf_afl]jfYdhgdala[kYf\
[geh]lalagf^gjj]kgmj[]kaeh]\]hjg_j]kk&
Rewards.H=g^l]fg^^]jk]imalq%lqh]j]oYj\klg
[j]Yl]af[]flan]kl`jgm_`gmll`]nYdm][j]Ylagf
hjg[]kk&;gjhgjYl]kaf[]flan]hjg_jYekYj]g^l]f
dafc]\lg_jgmhh]j^gjeYf[]Yf\k`gmd\afkl]Y\dafc
\aj][ldqlgaf\ana\mYdZmkaf]kkmfalh]j^gjeYf[]&

Management accountability.H=l]f\klgeYc]
ima[c]j\][akagfkj]_Yj\af_Y[[gmflYZadalqZ][Ymk]l`]
[geemfa[Ylagfdaf]kYj]k`gjl]j&GmjH=klm\q^gmf\l`Yl
`Ynaf_l`]ja_`leYfY_]e]fll]YeYll`]klYjlg^l`]\]Yd$
jYl`]jl`Yf_gaf_l`jgm_`eYfY_]e]fl[`Yf_]kdYl]j$ak
gf]g^l`]^Y[lgjkegklkljgf_dq[gjj]dYl]\oal`k`gjl]j`gd\
h]jag\k$`a_`]j=:AL<9_jgol`Yf\`a_`]j]imalqemdlahd]k&
L`]c]qlgnYdm][j]Ylagf^gj[gjhgjYl]kak[j]Ylaf_YhdYf]Yjdq
Yf\`gd\af_eYfY_]e]flYf\]ehdgq]]kY[[gmflYZd]&L`ak
oYq$k]dd]jk[Yfk`goYljY[cj][gj\g^km[[]kkl`YleYc]k
^mlmj]hdYfk[j]\aZd]&

PE focuses more on
value creation by being
disciplined with planning,
measuring, accountability
and rewarding achievement

We wanted to improve investor sentiment, so earning a

high value from the divestment was important. With this
vision, we increased the value of the deal by enhancing
performance and communicating well with the buyer.
=p][mlan]YlYf9mkljYdaY%ZYk]\fYf[aYdk]jna[]k[gehYfq

12

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Yj]Ykoal`afl`gk]ogjcklj]Yekl`YlYj][j]Ylaf_l`]egklka_fa[Yfl[`Ydd]f_]k^gj]p][mlan]k&
Gf]g^l`]egklaehgjlYfl[gfljaZmlgjklgeYpaearaf_Zgl`
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[gehYfa]ko]j]-(egj]dac]dqlg`Yn]klYjl]\hj]hYjYlagf
gflae]l`Yfdgo%h]j^gjeaf_[gehYfa]kl`YlklYjl]\l`]
hjg[]kkdYl]Yf\`Y\lglYc]k`gjl[mlk&

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Leading practices
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j]khgfkaZadala]kYf\^Y[adalYl]k]p][mlagf
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lgkmhhgjlk]hYjYlagfhdYffaf_Yf\]p][mlagf
:YdYf[]l`]f]]\^gj[gf\]flaYdalqoal`l`]f]]\lg
_]ll`]ja_`lh]ghd]afngdn]\afl`]kYd]hjg[]kkY[jgkk
^mf[lagfYdYj]Yklg[gehd]l]l`]\]Yd]^[a]fldq
<]f]Yf\[geemfa[Yl]l`]\]Ydlae]lYZd]Yf\
c]qead]klgf]kYf\k]lmhj]_mdYjegfalgjaf_
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dgo]jhja[]ZYk]\gfYfYjZaljYjq\]Y\daf]
@a_`%h]j^gjeaf_[gehYfa]ko]j]-(egj]dac]dql`Yf
dgoh]j^gje]jklg`Yn]km[[]kk^mddqeYfY_]\l`]aj
]p][mlagflae]daf]&

Which of the following governance steps should

you improve in your next transaction?
<]faf_h]jae]l]jg^l`]Zmkaf]kk^gjkYd]
5%

45%

;ggj\afYlaf_YddZmkaf]kk^mf[lagfkafngdn]\afl`]k]hYjYlagf
34%
12%
EYfY_af_l`]]p][mlagflae]daf]
12%

32%

KlYjlaf_hj]hYjYlagfgflae]
9%
Some room for improvement

31%
Ka_fa[Yfljgge^gjaehjgn]e]fl

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13

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64%
20%
16%
14

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optimized the tax

structure pre-sale
said it was the most
important initiative for
adding value
didnt do it but said they
ogmd\`Yn]Z]f]l]\egkl
from having done so

50%
of executives say they should improve on
determining their IT separation
requirements

Extracting business units from the main operating unit

was challenging, and we failed to adequately address the IT
separation requirements. This impacted the sale price and
also meant that expenditure on the divestment went up.
Executive at a US-based industrials company

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Leading practices
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bidder.>gj]pYehd]$k]dd]jkf]]\lglYadgj[geemfa[Ylagfk
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Which of the following buyer communication

initiatives did you undertake?
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71%

39%
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62%
18%
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55%

25%
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33%

43%

Undertook

Most important

Develop a value creation roadmap. Gfdq-1g^k]dd]jk

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15

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L`akmf[]jlYaflqakg^l]fj]][l]\afYdgo]jfYdg^^]j$hYjla[mdYjdqa^[geh]lalagf`Yk^Ydd]fg^^\mjaf_l`]Za\hjg[]kk&
L`]c]qlg]ph]\alaf_l`]\]Ydaklgmf\]jklYf\l`]dac]dqZmq]jkYf\`golghj]hYj]^gjl`Ylfal]_jgmh&

How to expedite the process

Potential consequences of not taking this step

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10

16

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Dgk][j]\aZadalqo`]fqgm[YflYfko]jZmq]jim]klagfk

Sellers need to tell a strong,

credible value story and
weigh the opportunity costs
of waiting too long for the
right price

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The delay in divestment preparation
Yf\l`]af]^[a]fl[ggj\afYlagf
between business functions affected
transaction value as market
conditions were changing drastically.
Executive at a UK-based
technology company

Because we were focused on

speed, we lowered the asset price
and did not do enough to search
out suitable buyers. Our hastiness
resulted in a failure to meet our
value expectations.
Executive at a Netherlands-based
media and entertainment company

Prioritizing operational steps and

then estimating the time required
for completion was the most crucial
aspect that we should have focused
on more. This heavily impacted the
time it took for the divestment.
Executive at a France-based
fYf[aYdk]jna[]k[gehYfq

We didnt do a good job of

identifying stranded costs or
providing transparency in the
fYf[aYdklYl]e]flk&O]dgkl[gfljgd
of the situation, and it took us a lot
longer to close the deal.
Executive at a US-based
oil and gas company

17

Conclusion
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afkapegfl`k$Ykcqgmj=Q[gflY[l^gjgmjRoadmap to
carve-out sale success&

About this study

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Produced in association with

Remark
Research from the Financial Times Group

18

How EY can help

EYs dedicated, multifunctional divestment
professionals can help clients improve portfolio
management, divestment strategy and execution.
First, we help clients understand the performance of their businesses
relative to peers and the rest of their portfolio. And then we help clients
decide where capital can be released from underperforming or non-core
activities and reallocated toward higher-growth areas.
We then work with clients to prepare them for a divestment and become
an informed negotiator. Our work with corporate and PE clients includes a
variety of divestments, including sales of the entire company, carve-outs,
spin-offs and joint ventures.
For carve-outs, in particular, we advise on which businesses are worth
investing in and which may be worth more to another owner. Our sectorfocused teams can also help clients understand the effect a divestment
could have on the remaining companys growth, brand and stakeholders.
Furthermore, we can help maximize transaction value by guiding you
through preparation and execution and removing any potential bumps in
the road before buyers get involved. For example, we create a compelling
value story by analyzing the growth opportunity, assessing underlying
trends and identifying hidden value in earnings, corporate allocations,
real estate, working capital, human resources, IT, operations and tax.
Finally, we assist with negotiations, Day One readiness, and helping your
company manage its remaining cost structure and focus on future growth.

Contacts
Pip McCrostie
EY Global Vice Chair
Transaction Advisory Services
pip.mccrostie@uk.ey.com
+44 20 7980 0500

Steve Krouskos
EY Global Deputy Vice Chair
Transaction Advisory Services
steve.krouskos@uk.ey.com
+1 +44 20 7980 0346

Paul Hammes
EY Global Divestiture
Advisory Services Leader
paul.hammes@ey.com
+1 312 879 3741

Rich Mills
EY Americas Divestiture Advisory
Services Leader
rich.mills@ey.com
+1 404 817 4397

Martin Hurst
EY Europe, Middle East, India and Africa
Divestiture Advisory Services Leader
martin.hurst@de.ey.com
+49 6196 996 27365

Stephen Lomas
=Q9kaY%HY[a[<an]klalmj]
Advisory Services Leader
stephen.lomas@au.ey.com
+61 3 9288 8441

Kenneth G. Smith
Japan Divestiture Advisory
Services Leader
kenneth.smith@jp.ey.com
+81 3 4582 6400

19

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