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.