4 minute read 1 Oct 2019
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How technology can give your divestitures a competitive edge

By

Tony Qui

EY Global Transaction Advisory Services, Chief Innovation Officer

Passionate digital leader and innovator transforming companies in disruptive growth through M&A, partnership and JVs. Connector of corporates and start-ups. Proud father of two children.

4 minute read 1 Oct 2019

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In a market where survival of the fittest means evolving fast, technology is both the catalyst and enabler of change when divesting.

To remain agile and on top of their game, companies are reviewing their portfolios more frequently. Their focus is on unearthing opportunities to keep strategic, operational and commercial performance at the peak of fitness, with an eye on building and maintaining a competitive edge.  

Technology-driven strategic divestments may enable growth

Technology-enabled industry convergence remains a driving force behind many company growth strategies. To enable businesses to pivot more quickly in pursuit of new growth opportunities, streamlining operating models is a priority.

Acquiring new technology, talent, production capabilities, market access or innovative start-ups in their entirety can be transformational, but costly. Companies wanting to raise funds to invest in the growth of their businesses are increasingly divesting assets for strategic reasons as opposed to poor business performance. But the cost of a divestment can be more than originally thought.

Despite the volume of M&A activity and increased competition for the best assets, in the EY Global Corporate Divestment Study, half (51%) of companies report their divestment took five months or longer from signing to closing, far beyond the three-month close that shareholders have come to expect. More than half (56%) said a lack of understanding around workstream interdependencies derailed or delayed the closing of their last divestment. As the deal jigsaw becomes more complex with multiple fast-moving pieces in play at the same time, turning to M&A technology is the smart solution for completing the puzzle with the least possible moves.

EY Capital Edge is a web-based platform specifically designed for use on complex divestitures. As a modular platform it provides tailored solutions to help in all aspects of a divestment process: real-time data at a glance from finance to project management, legal entities to real estate, operations to analytics.

Data transparency and efficiency help to optimize value when divesting

Take analytics as an example of where using EY Capital Edge adds value. The fact is that clients using analytics in a divestment are three times more likely to achieve a higher sales price and increase valuation in the remaining business. EY Capital Edge incorporates user-friendly analytics dashboards and visualizations. These help clients have clear sight of the financials, the implications on the parent company which is divesting the asset, and execution of the separation itself – setting them up for success.

In effect, analytics becomes a systematic part of the process and the benefits this brings are seamlessly integrated in the outcomes.

In my recent article How to power-up your growth strategy through data and technology I talk about how much data generation is happening at an astonishing speed, with an estimated 2.5 quintillion bytes of data being created each day. EY Capital Edge provides data transparency in multiple parallel workstreams giving a single clear and secure oversight of all teams, activities, documents, risks and interdependencies involved.

The one-stop-shop platform really comes into its own through process efficiency and how it promotes the level of collaboration needed for all parties to be pulling in sync in the same direction across multiple borders and boundaries. Automation of manual processes in EY Capital Edge saves time, increases governance and enhances traceability.

The fact is that the more efficient and transparent the divestiture process is for you, the better you can optimize its value and the quicker you can fund transformational investments to grow your business.

In a marketplace where time is money and your competitors are evolving at pace, can you afford not to embrace the technology that will give you the edge?

Summary

More companies are considering divesting assets to free up funds for transformative investments that evolve their agility and improve competitive advantage in business.

With delays and process derailments a very real threat to the value story, companies are increasingly turning to technology for support. EY Capital Edge provides a modular web-based platform to help keep your divestiture process on track. Even before the deal starts, it prepares your company to be divestment-ready, bringing your business’ transformative growth a step closer to reality.

About this article

By

Tony Qui

EY Global Transaction Advisory Services, Chief Innovation Officer

Passionate digital leader and innovator transforming companies in disruptive growth through M&A, partnership and JVs. Connector of corporates and start-ups. Proud father of two children.