Strategic Factors Important in Driving Divestitures
Divestiture Survey Report 2013: Sharpening your strategy
The deep recession of 2008–2009 and the subsequent slow recovery forced many companies to divest business units in order to raise cash or improve their financial position. Many of these divestitures were driven more by a corporate survival imperative and less by a long-term strategy for growth. As the economy has stabilized over the past year, strategic considerations have become a much more important driver for divestiture activity. The strengthening of corporate balance sheets, coupled with historically high levels of cash, is not just often increasing the appetite for acquisitions, but also leading companies to develop a more focused, longer-term strategy for divesting.
In the 2012 survey, 81 percent of respondents indicated that one of their two most important reasons for divesting is that the business was considered a non-core asset, up from 68 percent in the 2010 survey. Further, 62 percent of executives surveyed indicated the decision that a business unit was a non-core asset was the single most important reason for divesting. In contrast, only 37 percent of surveyed executives chose financing needs as one of their top two reasons in 2012, down from 46 percent in 2010.
Strategic considerations are important at large companies as well. Seventy-three percent of surveyed executives at large firms indicated a unit being a non-core asset as the most important reason for divestitures, compared to 48 percent among executives at smaller companies. According to the survey, following the recession, smaller companies are more likely to have already contracted to their core businesses, or they never left it, while large companies are consistently refining their product portfolio. Among executives at large companies, only 13 percent of respondents indicated financing was the most important driver, along with 20 percent of those at smaller companies.
Read more about our findings and insights around divestiture strategy in the Strategic factors important in driving divestitures chapter in our Divestiture Survey Report 2013.
To continue learning about the key insights and findings from our Divestiture Survey Report 2013, access our results in the following ways:
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- Access our print-friendly report and read our chapters.
- Read online featured content from additional sections of our report:
- Economic uncertainty makes divestiture planning a challenge
- Raising the bar – receiving more value from your carve-out
- Finding the “right fit,” at home and abroad – foreign and domestic buyer trends
- Shorten the waiting game – closing your deal
- Transition Services Agreements (TSAs) – planning now for post-close
- If at first you don’t succeed…consider putting your business back on the market
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