The lack of alignment in expectations may explain why opportunistic offers were a trigger for just 49% of divestments, down from 73% last year. If sellers are to avoid joining the 57% of respondents who admit to holding onto assets for too long, it is even more important to build a credible value story tailored to meet the needs and interests of all potential buyers.
To maximize value sellers should:
- Bring analytics into buyer negotiations. Although 79% of respondents used analytics in making their investment decision, the number using analytics to stress test data from a buyer’s perspective fell to 44% from 70% last year. Over half of respondents (54%) who didn’t use analytics in buyer negotiations admitted that they wished they had.
- Offer potential buyers the reassurance of stand-alone operating models. Forty-one percent of respondents recognized that their failure to capitalize and operationalize stand-alone entities delayed or deferred asset closing.
- Demonstrate flexibility in operating models, deal perimeters and sale structures. Fifty-seven percent of respondents say that a lack of flexibility in the sale structure eroded the value of their last divestment.
Despite the headwinds, just 38% of European companies now cite geopolitical uncertainty and macroeconomic volatility as the prime divestment trigger, down from 52% last year. Prospects for future deals remain bright, with prices well placed to rise again. A significant number of European respondents predict that the level of strategic sellers, unsolicited approaches, and buyers from outside their sector will increase over the next year. They also foresee a rising incidence of industry consolidation (80%, up from 67% last year) and large transformational deals (74%, up from 50% last year). To leverage these positive opportunities, sellers need to look through buyers’ eyes and deliver what they want to know and see. Crucially, they should streamline their operating model for agility, prepare assets for sale before the opportunity arises, and tailor their value story for all potential buyers.