Despite a strong M&A market in terms of corporate divestiture volume and value, our survey shows there is still room for improvement. The good news? Successful dealmakers offer lessons on divestiture strategy. By becoming a more prepared seller, companies can improve divestiture outcomes and emerge as a more streamlined and resilient company.
As companies gain distance from the deepest disruptions of the pandemic and continue to grapple with supply chain and labor concerns, they have good reason to review the business mix in their portfolios. Given recent economic and market changes, companies can benefit by weighing what still fits and will create value for shareholders, as well as what needs to go and will have more value under new owners.
Companies are continuing to adopt defensive measures, such as divestitures of non-core assets, to enhance their portfolios for the long term. They may be adjusting the portfolio for greater digitalization or to increase sustainability. Or they might be addressing more fundamental issues—whether each business activity supports their corporate purpose or whether it helps to build resilience for what comes next.
Market data shows the pace of corporate divestitures has significantly quickened, with the number of divestitures completed globally more than doubling from 2020 to 2021.1 In our survey, corporate leaders report they’ve done more divestiture transactions in the recent past and expect to do more in the future.
Survey responses also show major changes in the way organizations think about divestitures. The pandemic is playing a primary role in driving divestiture strategy, and eager buyers are plentiful. Companies can now prioritize speed and secured financing while allowing competitive pressure to drive price when choosing a buyer, and the valuations received in divestiture transactions have gone up markedly. Prices are getting a boost from a strong overall M&A market in which the value of global deals soared to nearly $5 trillion in 2021.
However, a relatively small group of respondents realize positive outcomes across key metrics—transaction value, speed to completion, and limited business disruption. As we explore in the report, prepared sellers can make gains across these dimensions—and emerge from the divestiture process as a streamlined and more resilient company.
Read the full report, take a deep dive into the data, and learn how your business can improve outcomes and emerge from the corporate divestiture process as a more resilient company.
About the survey
Data for this survey was collected from 500 individuals at private or public companies with revenue of at least $500 million that completed at least one divestiture in the past 36 months. Respondents were senior director-level or above, and the survey sought to balance C-suite and non-C-suite managers. Industry representation was controlled for a balanced distribution, and participation was balanced across major geographic regions (Asia, Europe, and North America). The survey was conducted from October 14 to November 12, 2021.
This is our fifth divestiture survey in the past decade, allowing us to track key trends related to strategy and execution over time. In particular, we are able to compare our most recent survey with data from the 2020 report (collected in late 2019, just before COVID-19 spread around the world), providing insights about how the pandemic has affected divestiture strategy and execution.
Through the survey, we were able to identify several themes to consider when companies engage in dealmaking in 2022 and beyond. Explore a breakdown by the numbers of corporate divestiture trends in this infographic.
Enhance your corporate divestiture strategy
Seize the opportunities that come with thoughtful divestiture planning
Even in a strong M&A environment, companies should approach divestiture planning and execution steps deliberately. Our 2022 Global Divestiture Survey shows that few companies have been able to get the best outcomes across the board, completing divestitures not just at the highest valuation but also quickly and with less disruption.
The opportunity this presents is for every company to be a prepared seller, embracing the practices that can help them achieve more successful divestiture outcomes, and—ultimately—drive long-term value for their shareholders.
If you’d like to talk more about divestiture strategy and how your organization can succeed in 2022 and beyond, let’s connect.