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Merger & Acquisition Services
Participants will identify why divestitures may decrease profitability for the remaining organization and how to mitigate any stranded costs.
Key takeaways
Host: Joel Schlachtenhaufen, principal, Global M&A Leader, Deloitte Consulting LLP
Presenters:
Jason Caulfield, partner, Head of Separations and Divestments, Deloitte UK
Lucy Julian, partner, Value Creation Services, Deloitte UK
Ezrick Wiggins, principal, M&A and Restructuring, Deloitte Consulting LLP
1.0 Overview CPE credit | Specialized Knowledge
Divestitures can be a tool to streamline businesses weighed down by non-core assets. However, companies may see lower shareholder returns if they don't stay focused on their cost base when contemplating a divestiture. Our research shows divestitures can fail to improve near-term profit margins. In fact, 51% of companies that divested assets in the last two decades experienced a profitability drop greater than 3.3 percentage points after the first year1, we’ll discuss:
- Possible impacts of divestitures on post-deal profitability
- Complexities introduced through Transitional Service Agreements
- Strategies to mitigate stranded costs
1 Capital IQ and Deloitte Analysis
