Divestitures should be viewed as essential means of raising, reallocating and preserving capital.
As companies reassess how they strategically manage their capital — almost invariably, the need or desire to divest arises.
Too often, companies view divestitures as the mark of failure. As such, they devote inadequate resources to the endeavor.
While many companies have established rigorous M&A management, when it comes to divestitures, managers have been too eager to “just get rid of it,” and rush through the sale of a business or asset, leaving value on the table or overlooking other strategic opportunities.
The reality is that divestitures should be viewed as essential means of raising, reallocating and preserving capital.
A sale, after all, is generally the recognition that an asset will be more valuable in the hands of another. Companies should be mindful of valuation and more forthright in conveying the value proposition to a new owner.
But whether operating from a strategic mindset — or executing a sale out of mere necessity — the key to obtaining optimum valuation is through preparation.
Divestitures, ultimately, are a process demanding excellence from beginning to end, including: