Divesting certain lines of business can bring sharper focus to the core business’ overall strategy providing better results.
Data shows that companies which properly divest non-core business divisions perform better over time.
Divestitures need to be given careful thought followed by deliberate execution of the M&A sale process. Many companies simply treat non-core business divisions as “out of sight, out of mind” and do not realize the cost or missed opportunity by not divesting.
Once the decision is made to divest a business division or operating unit, the sale process is no different than a “regular” M&A transaction. Often, certain overlapping, shared or co-mingled operations need to be identified and carved out when developing the M&A marketing material.
Divesting a business unit provides:
- Additional cash resources for the parent company, and
- More focus on the parent company’s core business.