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History reveals that divestment as a share of overall mergers and acquisitions (M&A) reached peak levels during 2004 and 2012–13 — essentially the periods post-downturn — when the economy was already recovering from crisis. In contrast, during the immediate downturn period, many companies stopped their divestiture programs and focused instead on internal cost management and preserving cash.
Leading CEOs are adopting scenario planning to play out their actions and reactions to these and other potential major disruptions. Assessing the portfolio of assets, operations, ecosystems and supply chains, including routes to customers, and considering how each aspect of their business is impacted at a fundamental level can yield significant insights.
Disruption never sleeps
Over US$10 trillion has been deployed through M&A since July 20201, with many companies undergoing major transformations. There is an investment arms race happening. CEOs and companies that have not yet positioned for the future will be left behind. The massive investments, especially in technology and digitalization, will begin to widen the gap between winners and losers over the near and mid-term. This investment gap is soon likely to surface in financial results.