3 Distinct Divestiture Types
A strategic perspective on creating value through divesting businesses
Divestitures are generally not as well understood as acquisitions. Stakeholders use variety of terminologies, have different expectations from value and time to value etc. Many people consider divestitures a symmetric mirror image of an acquisition which is not really the case when we look at practical considerations around transaction strategy, transaction structure and execution.
There are multiple factors to consider while baking a divestiture strategy as investors will often scrutinize the posture of the parent company, more specifically areas such as :
- Capital structure
- Financial strength
- Profitability
- Execution capability
- Operational impact
- Overall strategic direction of the company
- Attributes of divested entity
In addition to the above it is important to understand the different types of Divestitures, their implications on value creation, timing behind these and how capital markets would view them.
