WEBVTT

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A large divestiture is one of
the most complex actions that a

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company can take.

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We often compare it to a
decathlon.

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Numerous work streams have to be
coordinated and come together in

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a very short period of time.

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Making a successful deal in such
a high pressure situation

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requires careful planning.

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And this planning starts by
making sure that both the seller

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and the asset to be sold are
ready to go through the

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divestiture process.

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There are 4 main elements to
assessing divestiture readiness.

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First, you need to clarify on
the divestiture process itself.

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Is it the right time to divest
the asset?

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What's the right approach?

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For instance, do you want to go
for an IPO or do a trade sale

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and who are the potential buyers
and what are their expectations

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and of course what is the
valuation?

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I can expect the answers to
these questions can evolve as a

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divestiture progresses, but it's
essential to have a clear

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initial view before launching
the process.

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Second, since most divestitures
require separation of the asset

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being sold, sellers need to
understand the complexity of the

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so-called carve out.

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For example, what are the main
entanglements between the parent

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company and the asset today, and
what needs to happen, and what

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are the potential roadblocks for
getting the asset into a viable

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standalone state.

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The complexity of a car vault
may influence the timing of the

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process and it can even postpone
its launch.

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Third, the business plan needs
to have enough detail and

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substance to support assumptions
and withstand due diligence.

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Also, consider whether the
business plan is ambitious

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enough in terms of value
creation.

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And remember, a high quality
business plan not only supports

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an attractive valuation, it also
serves as a single source of

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truth throughout the
divestiture.

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And finally, sellers have to
define the equity story.

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Investors want to know why they
should buy the asset in the 1st

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place.

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A compelling story provides a
purchase rationale by

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highlighting where the asset
stands today and how it can

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create value for the buyers in
the future.

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The story can be aspirational,
but sellers should also make

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sure that it's realistic and
believable.

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And with such careful
assessment, sellers can make

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sure they are truly ready for a
divestiture.

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And if the assessment does
reveal readiness gaps, the

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parent company should consider
investing in improvements prior

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to the start of the sales
process.

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From our experience, making such
investments can yield rewards

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including stronger deal security
and higher valuations.