As markets begin to recover following the Covid-19 crisis, many businesses will be considering new strategies for structuring their operations and their portfolios. Their focus will be on efforts to reinforce their balance sheets against future market disruptions and economic anomalies, reduce costs, and optimize their operational efficiency. With economic trends and regulatory changes evolving rapidly, and product lifecycles increasingly shortened, leaders will need to aim for agility in their strategic portfolios. In addition, the ESG agenda is increasingly causing businesses to reconsider their portfolios by focusing more strongly on sustainability.
A carve-out — in which a company either floats part of the business on the public market or divests it in a sale — may be an attractive option for companies that want to restructure, refocus on core competencies, or adjust to major regulatory policy changes in certain sectors of the economy.
In this paper, KPMG and the Edge professionals have undertaken detailed empirical analysis of the results of 45 public capital market carve-outs that have taken place in jurisdictions including the US, Europe, UK and Australia over the past five years. This report's focus is on public carve-outs rather than private divestments or trade sales. Many published studies discuss the technical, accounting, and regulatory requirements of carve-outs, but few have analyzed the potential financial and performance outcomes and other aspects of these transactions.
The results of our joint analysis reveal five key considerations that management and boards need to think about carefully if they are considering a carve-out within their own business.