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COVID-19: A perspective on divestment projects

COVID-19: A perspective on divestment projects

Richard Sharman discusses how COVID-19 has accelerated the need for companies to rethink their portfolios.

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Richard Sharman, Global Head of Commodity Trading

Head of Sell-Side Deal Advisory, Head of Life Sciences Deal Advisory, Partner

KPMG in the UK

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“Shareholder value is maximised with active portfolio management, ensuring that the right resources are put in the right areas. This includes a clear, focussed strategy to identify businesses which do not fit.”

In our latest video on the new reality, Richard Sharman, Partner, Transaction Services, discusses how COVID-19 has accelerated the need for companies to rethink their strategic priorities and as a result identify non-core assets which they do not see being part of their business in the longer term.

Businesses of all sizes, across all sectors, are looking closely at their business models and balance sheet strength – to ensure they maintain liquidity and remain resilient through this crisis.  Divestments are an important lever companies are frequently using as part of their capital allocation frameworks as they look for sources of liquidity and opportunity.

Here are seven top tips for boards and management teams when assessing portfolios and embarking on divestment projects:

  • Find the hidden value. Understand what’s dragging down performance but could be worth more to someone else.
  • Prepare well. Use a rigorous and clear process.
  • Facts, not perception. Understand the true contribution of each business and do so dispassionately.
  • Minimise distraction. Assign a dedicated team.
  • Keep a fresh approach. Don’t just manage the portfolio as a one-off exercise –  things can change fast.
  • Prioritise growth. Allow management to focus on what matters.
  • Be brave. Unlocking value will require some tough decisions.

Find further information on diversture, from developing an exit strategy to enhancing the value of your retained business, on our dedicated page

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