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Divestment and separation

Divestment and separation

As the dust settles in financial services, it is likely there will be a wave of complex disposals and restructurings across the industry. This is particularly pertinent to retail banks, as in the rush to get the deal done; the complexity and financial impact involved in separating your business can be underestimated. It is essential to plan well for any separations to realize the full deal potential.

Many financial services organizations are highly complex, integrated businesses which poses a number of challenges when attempting to separate parts of that business. Many lack a true understanding of the extent to which their people, processes, assets, contracts, technology and infrastructure are integrated across their businesses, geographies and functions.

Selling a business or division may make strategic sense, but unless the separation challenges and the cost implications are understood, it can significantly affect the deal value, and the effects on the team involved.

A key lesson is to invest time and effort upfront to try to identify all the separation touch points and prioritize those where costs and risks may be material as this can potentially boost the sale price and mitigate the risk of damage to the parent business.