You are here

Don't forget to prune your portfolio

Divestitures can yield significant shareholder value when designed to command an optimal price.

Companies that regularly prune their portfolio, take an active hand in preparing assets for sale, manage the separation and use the sale funds to acquire core assets in a repeatable M&A programme make divesting a win-win for buyers and sellers.

THERE are many reasons why executives shy away from divesting non-core businesses. They're reluctant to shed revenue, fear the market's reaction to a smaller company and don't want the challenge of stranded costs. They reason that the business could improve in time, or have trouble accepting the...