Content thumbnail Global Corporate Divestment Study

PPoorrttffooliolio rreevviieeww In depth Communication: poor information-sharing hinders divestment success Improving communication between the Managing internal conflicts of interest board/strategy team and M&A team One in five companies (21%) says that overcoming emotional Forty-four percent of executives say they need better attachments to assets or other conflicts of interest is a communication between the board or strategy team and significant portfolio review challenge. Here, we outline some the M&A team. Here are some leading practices to improve key ways to overcome it. the dialogue: During the portfolio review process: • Establish portfolio review protocols so that it is clear • Define objective evaluation criteria which businesses are on a watch list • Develop appropriate models, timelines and milestones • Discuss portfolio review findings regularly in board meetings relative to pending transactions to allow time for to support objective decision-making value enhancement • Involve the business stakeholders in the process so that • Develop related stakeholder communications, including they understand performance expectations, and the review communiqués directed to equity analysts feels less like an event — or a threat • Align internal functional work streams and Once the decision has been made to divest: service providers • Listen to employee concerns early and explain the vision for the separated business Appoint a project leader to manage • Involve business stakeholders in discussions with external the portfolio review process advisors so they understand potential opportunities, both Forty-four percent of corporate executives say dedicating for the parent company and for the target specialized resources to the process is a significant portfolio • Incentivize key executives to effectuate a successful review challenge, and nearly one in five companies (18%) transaction (e.g., retention payments, stock options, say they lack leadership support. A key way to resolve these performance bonuses) issues is to enlist a project leader who is sufficiently senior and experienced in the organization to have the C-suite’s ear. This person is empowered to secure the smartest functional leads — colleagues who aren’t always readily available — and to make them accountable. No external advisor can do that. A company publicly announced the timing of a spin-off without alignment among the deal team. During the separation, the company discovered several regulatory hurdles in numerous countries that delayed the transaction by six months. The stock lost more than 20% of its value post- announcement and did not recoup its losses until after separation. 15

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