How can you operationalize a divestment for success?
Always be divestment-ready
Media and entertainment companies remain slow in launching the divestment process, as 65% of companies still say they held onto assets for too long when they should have divested. Media and entertainment companies are reviewing their portfolios more frequently, and they will need to combine this with taking action to ensure divestment decisions are not delayed.
Once the divestment process is initiated, lack of preparation can remain a critical factor.
- 58% of companies state that their last divestment was delayed because they didn’t fully prepare for the regulatory requirements.
- 63% say lack of preparation in dealing with tax risk was a major cause of value erosion in their last divestment.
Weigh the merits of different structures
Eighty-three percent of media and entertainment companies say their most recent divestment took the form of a carve-out sale, up from 40% in 2018. Under this approach, systems, processes and even legal entity separation work need to begin before the deal process starts. Initiating this work before a buyer is known helps accelerate the separation and stand-alone timeline. For example, 37% of companies reported that an optimized legal structure was the most important step in enhancing sale value.
While carve-outs provide beneﬁts, other deal structures (e.g., joint ventures, tax-free spins, full enterprise sales) can sometimes support greater return to shareholders, or align better with the long-term goals for the remaining organization. With 65% of media and entertainment companies saying lack of ﬂexibility in the sales structure caused value erosion, being open to other structures is critical.