Companies increasingly need to divest
In today’s environment, as the real cost of capital rises, so the financial hurdle rate for businesses is increasing. There are clear reasons to reshuffle portfolios. Many, or even most, groups will find that some of the businesses they own no longer fit strategically or financially. At the same time, some companies are being forced by excessive leverage and extreme sensitivity to the economic cycle to sell high quality businesses. Divesting companies today will require creativity. Innovation will include deal structures to cover equity, debt, management and counterparty arrangements.
Many of the accepted "rules" for divestment processes no longer hold true. There will be no such thing as a "normal" structured divestment process until further notice. Furthermore, preparation will need far more consideration. Divestments will not yield the value they did when the economy was expanding steadily. Value will be more elusive. This is a buyers’ market – not a sellers’ – and the best defence against that shift is focusing intensely on the buyers’ requirements when preparing a divestment for market.
Our professionals have experience and knowledge advising on divestments in various markets in both Japan and overseas and provide a prompt and effective service to create more value from divestments.
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