2017年-_6N3X9~D

Summary of Deloitte's Report: "Is it time for a break? How to maximise divestment success"

Core Content

This report by Deloitte explores the increasing importance of divestment in corporate strategy, particularly in low-growth economies. It outlines the challenges and opportunities companies face when divesting assets, and provides insights from a survey of 123 global organisations. The report highlights the strategic, operational, and financial aspects of successful divestment, including the role of leadership, data analytics, and buyer selection.

Main Points

1. Rising Divestment Activity

• Divestment is becoming a key lever for delivering shareholder value and ensuring strategic alignment.
• In 2016, companies announced nearly USD 200 billion in global divestments, up from USD 150 billion in 2014.
• The reasons for increased divestment activity include:
  • Regulatory requirements in mega-deals.
  • Portfolio review and optimisation to focus on core areas.
  • Shareholder activism and pressure to shed non-core assets.

2. Challenges in Divestment

• Many companies struggle to achieve the expected value from divestments.
• Divestments are often more costly and time-consuming than anticipated.
• Non-financial costs such as employee morale, reputation, and customer perception can be significant.

3. Strategic Motivations for Divestment

• The primary motivations for divesting assets include:
  • Strategic fit and alignment.
  • Portfolio optimisation.
  • Market and competitive landscape changes.
  • Shareholder activism.
• Non-core assets are typically defined by:
  • Non-synergistic products (33%).
  • Poor operating performance (33%).
  • Weak market position (33%).
• Only 19% of respondents cited limited growth potential as a reason for non-core designation.

4. Smart Steps for Success

• Form a dedicated separation team and follow a robust, structured divestment plan.
• Ensure separation executives have operational knowledge of the business being divested.
• Conduct thorough sell-side preparation to provide clear and consistent financial information.
• Communicate regularly with employees to manage cultural change and maintain morale.
• Consider auction processes over single-bidder deals to increase deal value and seller bargaining position.
• Explore a broader range of buyers, including cross-border and private equity, to maximise value.
• Understand the buyer's needs and capabilities, especially in terms of long-term commitment and operational integration.

5. Buyer Considerations

• Companies are more likely to market to corporate buyers and domestic buyers, but private equity (PE) and cross-border buyers are more likely to complete the transaction.
• PE buyers are increasingly interested in premium assets and offer speed and certainty in closing deals.
• Emerging market buyers, such as Chinese investors, require detailed operational data, including manufacturing, logistics, and sourcing information.
• Buyers often seek in-depth data and raw data sources, and value parent company interaction during the process.

6. The Role of Data and Analytics

• Buyers are demanding greater access to data for detailed analysis, including bottom-up modeling.
• Sellers should provide workforce, commercial, and market data to support the asset's value proposition.
• Data is essential for pressure testing assumptions and understanding the business from the buyer’s perspective.
• The use of data analytics is becoming more widespread in the divestment process.

7. Preparation is Key

• Preparation is often underestimated but is crucial for successful divestments.
• It includes carve-out preparation, such as deconstructing legal entities in different regions.
• Sellers should create standalone EBITDA calculations before engaging with buyers.
• Proper preparation helps avoid surprises, reduce due diligence challenges, and maintain deal credibility.

Key Information

• Survey Findings:

  • 72% of respondents prioritise business valuation as the most important pre-deal task.
  • 61% prioritise analysing optimal deal structures.
  • 71% of respondents cited employee morale as the biggest challenge in divestments.
  • 40% mentioned lack of communication with employees as a major issue.
  • 37% cited more vendor due diligence as a key area for improvement in past divestments.

• Quote Highlights:

  • "Value in the eyes of a seller or a buyer is a prediction about the future." – Andrew Robinson, Deloitte UK Head of Valuations.
  • "Divestments are now recognised as a core part of an organisation's priorities." – Larry Hitchcock, Deloitte Head of Global Divestments.
  • "The extent of needed preparation is always underestimated." – Head of M&A, Global Engineering Group.

• Trends Observed:

  • Increased political and economic uncertainty is making asset valuation more complex.
  • Emerging market buyers are becoming more prominent.
  • Data analytics is playing a critical role in the divestment process.
  • Private equity buyers are adopting more strategic and long-term approaches.

Conclusion

Divestment is a strategic tool that can enhance shareholder value and align corporate portfolios with core business objectives. However, it is not without challenges. Companies must prepare thoroughly, communicate effectively, and understand the evolving market dynamics and buyer expectations to maximise the success of their divestment strategies. The increasing role of data analytics and the need for clear leadership are also essential for achieving a successful outcome.