Divestures of Segments

Want to raise funds by divesting a business unit? Get the maximum valuation for your business.

Divestures of Segments refers to sale of certain business units or subsidiaries for cash or other compensation. Firms divest a segment to achieve various types of operating, funding and other strategic objectives.

Operating objectives may vary from concentrating on core operations to ensuring special focus is provided to the spun-off business unit. Funding objectives can be like generating funds to strengthen the existing business, investing in a new business or paying off creditors. Other strategic objectives include making the firm more market efficient by reducing diversification, divesting a business unit that is underperforming, complying with regulatory requirements, achieving certain social goals, etc.

In most cases, companies are willing to lose complete control of the operation of the segment divested. However, in certain cases they continue to own majority interest and maintain operational control.

Divestures can be done using a number of methods – standard ones include negotiated sales, sealed bids and fixed price product catalogues. Other avenues include online/offline auctions, specialty marketplaces, consignment vendors, etc.

Challenges

  • Identifying investors who would be interested in buying the specific business segments
  • Ensuring all legal requirements are complied with, especially in case of cross-border transactions
  • Deriving the maximum returns based on fair valuation of your business

 Solutions

  • Vast in-house database of investors, with the ability to filter them according to different investment criteria and needs
  • Sales pitch creation to showcase the business to investors, with proper valuations and benefits resulting from synergies of such deals
  • Negotiation with investors to ensure best value is generated for the business
  • Legal team to take care of all the regulatory and compliance requirements

Benefits

  • Helps identify most profitable exit routes, which are in sync with the business objectives
  • Large membership base consisting of both small and large investors – helps in quick divestiture of business at the maximum possible valuation
  • Provides all the essential services to facilitate smooth operations and ensures that the sale is conducted in a smooth and efficient manner

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