Companies leveraging digital advances to drive value in and outside deals
Eighty-four percent of Canadian executives expect to divest in the next 12 months, according to the EY Global Corporate Divestment Study 2018. This number is over 10% ahead of the global average (72%).
“Now more than ever, Canadian companies are turning to divestments as a way gain a competitive edge,” says Doug Jenkinson, EY Canada Divestiture Leader. “They’ve been conducting more regular portfolio reviews, motivated to shed non-performing assets and capitalize on the digital agenda. It’s exciting to see these reviews start to bear fruit.”
Survey results reveal technology continues to be a growing theme in and outside of divestment decisions. Up 20% from 2017, the majority (92%) of Canadian study respondents say the changing technology landscape is the biggest influence on their divestment plans.
That’s translating into an increasing number of Canadian companies looking at divestments as a way to raise capital and fund digital growth strategies. In fact, nearly half (41%) of Canadian executives say the need to fund new technology investments triggered a recent major divestment, using the proceeds to reinvest in the business – with the top priority to improve operating efficiency.
Technology also plays a role within the deal process itself. The study finds companies are leveraging data analytics to enable more informed decisions about growth strategies and drive value through the divestment process. Nearly half (43%) of respondents say analytics added value as a way to understand the true value of a non-core business and whether or not to exit.
“It’s clear that technology is both a divestment driver and an optimal route to help fuel their digital transformation,” says Jenkinson. “But businesses need to remember that preparation is the key to maximizing value. Taking the time to understand how technology is affecting your business, building analytics into your decision platforms and developing effective diligence materials will aid in creating the most value for your business through the deal process.”
For more information, visit ey.com/en_us/divestitures
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