Divestments are a popular strategy for increasing shareholder value, improving profitability and emphasising core competencies. Unfortunately, sellers often do not fully consider what strategic objectives they want to achieve, making value creation virtually unachievable.
A divestment requires as much thought and planning as an acquisition. It requires careful planning well in advance. Below are some critical questions decision-makers should ask:

Key Questions

• Is divestment an appropriate action, now or in the future?
• What should be divested?
• How should we divest it? (e.g. straight sale, spin-off, equity carve-out, alliance or joint venture)
• What preparation is required to preserve value and facilitate the process?
• Who is the most likely to give us the best deal?
• How much value will the divestment create
• What are the tax and accounting consequences?
• How will I know that the transaction will achieve its objectives?

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How we can help

For companies embarking upon a future sale or divestment, there are a number of key components in the process that are required not only to consummate a transaction, but to maximise value and negotiate the most attractive deal. There exists a direct correlation between a seller's preparedness and an acquirer's comfort level and trust in the acquisition opportunity. Comprehensive and efficient management of the process creates a positive perception and instils credibility in the selling company, both of which help to generate above-average purchase price terms. Leadenhall can help you take a systematic approach to the divestment process. We are able to support you at each of the critical steps before, during and after the transaction, as follows:

Independent strategic assessment
• Clarify objectives
• Analyse all your options
• Identify risks and opportunities

Plan the transaction
• Assemble and co-ordinate team members
• Value the business
• Consider tax and accounting implications
• Manage confidentiality

Prepare the business
• Reduce "transaction friction"
• Identify key value preservation issues (e.g. employee retention, transition planning, etc)
• Identify and contact potential buyers

Support the execution
• Negotiate and facilitate the transaction
• Structure the transaction to minimise tax

Post-transaction Review
• Measure the financial and operational performance following the transaction

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Our track record

Leadenhall has over 20 years experience as an independent corporate advisory firm. In that time, we have been involved in many successful divestments, including:

• Review of the market position of a subsidiary of a US corporation. Preparation of an Information Memorandum, review of potential purchasers, negotiations with those purchasers, drafting a Letter of Intent and project management of the divestment to completion, including resolution of escrow issues. Liaison with US management and local tax and legal advisers.
• Urgent advice to the Receiver on the acceptability of an offer from the parent company of a Group in Receivership. Review of divestment alternatives and potential pricing by other participants in the industry. Preparation of a Report for discharge of the statutory obligations.
• Development of a tender process for the divestment of Ottoway (S.A.) workshops and business units (machine shop, steel fabrication, foundry). Evaluation of bids and negotiations with individual tenderers.
• Preparation of an Information Memorandum for the Asset Management Task Force for the divestment of SAMCOR ["South Australian Meat Corporation"].
• Valuation of a rural products manufacturing company and advice on the sale process.
• Advice on the sale of a medical imaging company to a public company in return for cash and scrip.
• Review of the financial position and strategies of shareholders in a major primary processing business. Assessment of current and future profitability levels and potential acquirers. Negotiation of a divestment, including complex structures regarding tax and company entities and assets divested (Turnover in excess of $250 million per annum).
• Acting for the vending shareholders in a management buy out of a large, established family group of companies and negotiation of the transaction.

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