Corporate divestment is a complex process of carving out the target entity from the parent, especially where there are significant interdependencies between the entity being divested and the parent, or the divesting entity. Companies can drive significant value by adopting a systematic approach to identify all interdependencies and develop and implement a robust carve-out action plan.
Partner and Head – Post Merger Integration Practice
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What is the secret to a successful carve-out
The key to success or failure of a carve-out is dependent on the level of preparation and readiness of the stakeholders from both the buy-side and sell-side. A focus on value drivers early on in the transaction, combined with a disciplined, agile and sustainable carve-out approach increases the likelihood of success
Organizations are realizing that divestments can be a growth tool and can be used to re-allocate assets and resources to focus on core competencies and strengths. Some of the key benefits that organizations achieve from divestment are:
- Increase in shareholder returns
- Focus on value propositions that are closer to the core competencies of the firm
- Prioritize resource allocation based on business requirements
- Divest a non-performing asset(s) and/or reduce debt
- Address any shareholder and market concerns
- Meet regulatory and compliance requirements
Key considerations for buy side and sell side for a successful carve-out
EY has a tried and tested five step methodology which is designed to maximize deal value during carve outs. We assist clients in conducting due diligence, identifying all the dependencies, drafting an execution roadmap and setting up a program management office to execute the carve-out efficiently and effectively.
Read how EY is helping clients realize these benefits