Human capital carve-out study

Strategies of successful sellers

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Human capital often represents a company’s largest annual operating expense, and employee benefit obligations add significant corporate liabilities. On the other hand, employees form a company’s foundation and drive profitability through product quality, innovation, market leadership and customer relationships.

Value = Retention + Cost + Speed

Human capital management can therefore make a carve-out transaction successful, or it can destroy value and even break a deal. That’s why we surveyed executives experienced in global corporate divestments to determine how their human capital initiatives impact their deal success.

Our study highlights current trends and leading practices that can help companies use divestments to achieve key corporate goals, such as raising, optimizing and preserving capital. Divestments can help companies maximize shareholder value and better align their business portfolio with their corporate strategy.

Study respondents were able to expedite their sale, maintain control over the process and maximize deal value by following these leading practices:

  • Effectively prepare for negotiations by providing sellers with financial information based on actual employee data and expediting the process by understanding the carve-out business’ HR needs before negotiating the sales agreement
  • Maintain stable business operations throughout the divestment process by addressing labor and critical employee concerns
  • Manage employee mindset by keeping employees focused on business operations and customers through targeted communications and retention planning
  • Use the HR team to help execute a timely and cost-effective disentanglement and business transfer

For leading companies, divestments are as essential to capital strategy as acquisitions. A successful divestment increases shareholder value while preserving and optimizing capital.

However, carve-out divestments are often complex because most involve multiple countries and, therefore, multiple cultures and regulatory bodies. Sellers also face competition for limited buyer capital, which can make capital management a challenge.

Buyers want investments that will enhance their business portfolios and growth potential. Sellers can present a compelling message to buyers by considering market opportunities, goals and asset performance and by incorporating the right professionals into the right roles.

Both sellers and buyers will benefit by considering the sensitive needs of impacted employees, contractors and customers.

Download our study to learn key strategies of successful sellers, leading best practices and questions you may want to ask when:

  • Preparing for negotiations
  • Maintaining business operations
  • Managing the employee mindset and
  • Using your human resource team to help in the divestment process