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Global Corporate Divestment Study 2018 Canadian findings

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Active portfolio reviews are moving divestments up Canadian companies' corporate agendas, according to the EY Global Corporate Divestment Study 2018.

Last year, the majority (73%) of Canadian executives surveyed indicated plans to conduct more regular portfolio reviews. We’re now seeing the result of those reviews reflected in a greater number of divestments expected in the next 12 months. In fact, survey results show the vast majority (84%) of Canadian executives expect to divest in the next 12 months — compared to 72% globally — and that number jumps to 95% over the next two years.

More Canadian companies are starting to consider divestments of non-core assets. Not only are more Canadian companies considering a divestment, nearly a quarter (24%) of respondents say they have divested of more than two businesses in the last three years.

Preparation is key to maximizing value. The majority (68%) of respondents pointed to lack of preparation in dealing with tax risk, and 57% noted that a lack of fully developed diligence materials contributed to value erosion in their last divestment.

Technology is a growing theme in and outside of deals. Survey results show more companies are leveraging digital advances to drive value in the divestment process and beyond. Nearly half (41%) of Canadian executives plan to reinvest funds from a divestment into technology.

Key global sectors show strong appetite to divest. A large majority (87%) of both oil and gas and financial services respondents are considering a divestment over the next two years. In oil and gas, 73% say that the changing technology landscape is influencing their plans. Meanwhile, the majority of financial services companies are looking at innovative opportunities for cost savings, including carve-outs of back- and middle-office assets (69%) and transferring employees to a third party and contracting them back as needed (67%).

Global Corporate Divestment Study Canada Findings 2018


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