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 [back to top]
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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For your interest "Divesting Proactively" by Lee Dranikoff, Timothy M. Koller, and Antoon Schneider in The McKinsey Quarterly, 2002, Number 4. www.corporatefinance.mckinsey.com/_downloads/knowledge/mof/2002_no4/divesting.pdf [back to top]
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