Tag archives: divestments

Corporate Divorce: An Analysis of Divestments and Lessons to Carry Forward

In the midst of these unprecedented times, many companies are looking to mergers and acquisitions to realize new growth opportunities and diversify; however, before heading down this road, one question needs to be asked: is it a marriage built to last or is it doomed from the start? A recent paper, which examined 1,365 M&A deals occurring between 1983 and 2010, found that 46% eventually resulted in divestment or “divorce”. Moreover, 77% of these corporate divorces stemmed from M&A failures. The authors identify post-acquisition industry shocks and cultural dissimilarities as the primary causes behind corporate divorce, but suggest that … Continue Reading

What can companies learn from PE sharks?

Divestment is one strategy that a corporation can use to unlock funds for future growth and create long‑term shareholder value. According to a recent E&Y study, a successful divestment must meet three criteria: (i) it must create a positive impact on the valuation multiple of the remaining company; (ii) it must generate a sale price above expectations; and (iii) it must close ahead of its timing expectations. Only 19% of the companies surveyed for the study met all three criteria. Considering that divestiture activities are likely to increase in 2016 (a more detailed discussion on 2016 divestiture outlook can … Continue Reading

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