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Divestiture Survey Report 2011

Carve-out trends and leading practices

With rising expectations of the economy to improve in 2011, should we expect an increasing number of divestitures? What are the drivers behind companies’ decisions to divest? How successful are they in meeting expectations?

To better understand these issues, Deloitte conducted a survey from November 22 to December 7, 2010, surveying more than 300 professionals who have been involved in divestitures or carve-outs. The results shed new light on leading practices that may be useful in capitalizing on the anticipated changes in the M&A environment. According to the survey, 82 percent of the respondents worked at companies that had conducted at least one divestiture transaction within the last three years. The majority (58 percent) of respondents expect divestitures to increase over the next three years, stating that they were “highly” or “moderately” influenced by the external market when considering carve-outs, highlighting the significant impact of economic conditions on the increase of divestiture activities.

Divestiture Survey Chart 1

According to the survey, the top reason for divesting a business unit or segment is that it is not considered core to the company’s business strategy, with 53 percent of respondents citing this as their primary reason for divestiture.

Divestiture Survey Chart 2

Companies that hold off on shedding non-core businesses can expect to see a promising seller’s market emerge. With stabilized earnings and a growing cash reserve, many U.S. firms will be looking for places to invest that cash which is expected to fuel market demand for carve-outs. To take advantage of the current economic transition period, companies should prepare divestiture strategies that align with their long-term goals for business growth.

Click here to read the full survey report.

For more information on this report, please contact:

Robert Coury, managing director, Deloitte Corporate Finance LLC
Jeffrey Weirens
, principal, Merger and Acquisition Services, Deloitte Consulting LLP
Andrew Wilson
, partner, Merger and Acquisition Services, Deloitte & Touche LLP

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