During periods of economic uncertainty, many companies find a frequently overlooked source of capital and liquidity – their own assets – that become a lifeline. Divestiture of everything from individual assets, product lines or subsidiaries to entire operations is now a key consideration for all corporate strategies.
During challenging economic conditions, including tight credit, reduced operating results and myriad other obstacles and challenges, executives and boards of directors understandably focus on ensuring the financial health of their organizations. When divestiture becomes not only an option but also a solution, navigating the many moving parts becomes even more critical for realizing asset values and achieving success.
Challenges and Opportunities
Consider some of the issues organizations routinely face during divestitures:
• Underestimating project time, effort, cost and feasibility
• Unraveling shared services and facilities, including decoupling heavily integrated IT and business systems or unwinding outsourced services
• Minimizing stranded costs and understanding the cost impact of excessive separation delays
• Facing weakening morale and employee defections, as well as a lack of resource capacity to accomplish divestiture activities, while continuing to run the existing business
• Executing and maintaining transition services agreements
• Navigating an ever-changing business environment while keeping both retained and divested businesses viable
Our Point of View
How does an organization address the challenges of divestiture while realizing the value developed over time through investment in assets and its commitment to businesses now being considered for sale?
We believe the keys to a successful divestiture include:
• Establishing an experienced project management office (PMO) that is capable of identifying and understanding all required activities and directing the divestiture successfully
• Accurately forecasting and effectively managing costs associated with the divestiture while reducing expenses where possible
• Ensuring the continuity of control environments, and more broadly, the viability of both the retained and divested business units as assets, as they are separated
• Understanding the key internal and external influences affecting the divestiture and preparing to respond as needed
• Maintaining senior management sponsorship of the divestiture and sharing the future vision and objectives with employees
• Leveraging subject-matter expertise, best practices and “lessons learned” to minimize impact on daily business operations and staff
How We Help Companies Succeed
Protiviti has an established practice that is dedicated to delivering successful divestiture, separation, carve out and restructuring services. We have developed a proprietary methodology that enables us to help our clients successfully address all aspects of these projects, from planning and execution to transition. Our practice provides these services through cross-disciplined teams that bring broad perspectives and deep expertise when providing clients with transaction support, project management, and industry and other subject-matter expertise.
Our professionals possess decades of divestiture experience. We have assisted some of the world’s largest organizations, providing services across a wide range of operations and assets and frequently assisting our clients with significant concurrent divestiture projects.
We were engaged by a diversified global financial services company to establish PMOs to evaluate, plan, execute and report on the consecutive divestitures of several significant business units and ultimately the complete divestiture of remaining operations.
The first divestiture consisted of a multi-billion dollar global futures and options business. Our work supported senior executives and officers in the United States and in each country where this business had operations, including the United Kingdom, Japan, Hong Kong, Korea and Australia.
Upon the successful divestiture of that business, our client retained us to assist in the more than $20 billion divestiture of a bank in the United States, again advising senior executives and officers. Finally, we assisted our client with the sale of its remaining operations. These transactions were valued at more than $150 billion.
Protiviti helped the company navigate through a situation for which it had no experience. We worked seamlessly with our client, its investment bankers and its legal counsel to complete the divestiture projects successfully while ensuring the assets remained valuable and viable. Having assisted numerous organizations with divestitures, we knew what
to do and the right way to go about it. Just as important, we helped our client maximize the value of assets they were divesting to generate as much earnings as possible.