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How to predict problems with a divestiture before they surface

Learn how an EY team managed one of a region’s most complex divestiture efforts ever by developing innovative processes and solutions.

Related topics Innovation Consulting
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The better the question

If you’re only reacting to your client’s needs, are you too late?

Aligning on a multinational and complex project can be an extremely difficult task.

In large-scale mergers and acquisitions, the acquiring company is often asked by regulators to divest assets in order to maintain market competition. In 2016, the EY Global merger divestment team was asked to help manage what would be one of the GSA (Germany, Switzerland and Austria) region’s most complex divestiture efforts in history — spanning 130 countries and 5,000 people around the world — in a very tight timeline.

A team of 120 EY professionals, representing multiple service lines and regions were mobilized to align on a singular client goal — to divest a global business on a rapid timescale with exceptional dedication to the client’s needs both locally and globally.

The complexities of this project were vast. At the beginning, neither the full scope of the divestment nor the ultimate buyer was known. Depending on the buyer, each asset needed a well-planned pricing strategy as well as a process to carve out the assets from the existing business and transfer them to the acquirer. Furthermore regulators in each of the 130 markets had their own local rules of compliance and each of these affected negotiations between the client and the company purchasing the divested assets. It was clear that to succeed on a project of this size and across so many countries, the EY team had to act as a highly integrated team, and innovation and efficient communication were the keys to success.

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The better the answer

Working with accuracy and speed

New solutions are streamlining processes and improving the industry.

To manage these challenges, the team created two unique solutions. One was a merger control blueprint, which helped achieve clearance in all 130 jurisdictions to close the deal. From this, the client could manage the crucial anti-trust processes in all countries simultaneously with accuracy and speed.

The second was a “Carve-Out Factory,” a first-of-its-kind asset transition solution. This provided a hyper-lean outsourced business model that increased the speed and efficiency of the carve-out and eliminated the need for cumbersome transitional service agreements. The solution is so effective that it is being applied by divestiture teams across EY organizations and is likely to become a market standard.

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The better the world works

Looking to future transactions

Innovation and dedication can help navigate complex transactions to come.

For two years, more than 400 EY professionals remained aligned across continents and functions, helping the client successfully deliver the divestments. On completion, the team received outstanding recognition from the client for the innovative solutions, with the CEO declaring “EY made the impossible — possible.” However, the key success factor was the continuous communication and dedicated service to help the client navigate this difficult journey. Over time, this dedication ingrained every team member with a deep ownership of the client’s needs and an understanding of the complex client issues, giving them an ability to predict unexpected problems before they could arise.

The experience and knowledge gained will be applied across the global EY network, and the innovative solutions developed will contribute to the EY organization’s competitive advantage in future transactions.