Four Key Tips to Divestment & Sale Success

FOUR KEY TIPS TO DIVESTMENT & SALE SUCCESS

Many organisations have gone down the M&A path a number of times. Indeed, they have probably become quite adept at the process, with rigorous management steps and in-house capabilities to match.

“But what about carving out and selling a business?”

Experienced sellers will tell you that carving out a business is far often more complex than making an acquisition.

In fact, it can come as quite a shock just how challenging it is to maintain transaction momentum while separating all the organisational, operational and technological entanglements. More critically, if the sale process starts to struggle with inevitable execution delays, then anxiety levels will also increase. This can potentially doom the entire sale process with political infighting, loss of critical talent and departure of key investors.

“For a successful sale and carve-out, it’s vital to have a speedy and confident divestment process”
Over the past 20 years, BTD has provided M&A, integration, divestiture, and separation advisory, planning and execution services across dozens of transactions. While every divestment has its own unique set of challenges there are nonetheless just four key precepts behind every successful sale.

1. Governance

A divestment is too complex to be managed in a decentralised manner. It requires intense, dedicated, and focused management from the centre, with end-to-end alignment between the board of directors, the CEO, executive leadership, and the steering committee. A well-defined governance structure will significantly mitigate operational and business risks for both the buyer and the seller.

2. Buyer Profile

The sale process should be tailored to fit the buyer profile, what they think and what they do. ‘Walk a mile in their shoes’; understand their profile, their plans for the acquisition and what barriers they would face. Take an outside-in mindset; ensure all divestment activities are about creating a future-ready business for the buyer.
In addition, do not underestimate the power of storytelling to control the sale agenda. While a sales process will invariably have documented facts and figures, it’s the overall narrative, anecdotes and individual stories that create meaning, grab interest, and inspire confidence.

3. Team Leadership

Leadership and team are the capstone to success. These are the people – leaders and followers, who make the ‘deal real’. They must embody an affirmative, living and breathing approach to motivating, directing and empowering others. Leading a divestment successfully is an experience-driven skill-set – the more you do the better you get. It’s therefore critical to have leadership that combines expertise, ‘battle scars’ and the gravitas to propel the sales process forward.

4. Business Agility

Business agility can make the biggest difference of all when it comes to a fast and confident sales process. Based on a set of very simple concepts it represents a powerful and different way of working.
For an accelerated sales process, trade-offs will inevitably need to be made around opportunity, value, speed, and risk. The traditional approach is to use the organisational hierarchy and standard protocols to make arbitrated decisions.
However, an enlightened and agile alternative is to guide, empower and direct teams to decide and take action themselves. Agile, as a way of working, is powerful indeed! Much gets written about the topic; often on the process side of things – sprints, scrums, and stand-ups and all that. But Agile is really about accountability, or to put it more emphatically, Agile is activist accountability in action.

Takeaway

Experienced sellers will tell you that carving out a business is far often more complex than making an acquisition. A fast and confident sales process will deliver a bigger premium, strengthen the balance sheet and generate additional shareholder value. It’s also a win for the buyer who gains with a smooth close, fast handover, plus the tools and vision to gain additional value.