How can divesting fuel your future growth?

How can divesting fuel your growth strategy? Read our 2018 divestment study results.

Global Corporate Divestment Study 2018

Our annual study reveals that divestments are now a strategic imperative for senior corporate executives in every sector, and that technology – both as threat and an opportunity – is influencing their thinking.

Paul Hammes
EY Global Divestiture Advisory Services Leader

Our perspective

It’s been another turbulent year — from an improving, synchronized global economy to ongoing political disruption — making boardroom discussions more complex. But one theme stands out in our latest Global Corporate Divestment Study: digital transformation. It’s one of the biggest influences on the C-suite in 2018, both in terms of capital strategy and operating model decisions. Digital disruption, transformational shifts in customer preferences and sector convergence are forcing companies to make bets on future technology now.

The result of this focus is a significant increase in companies divesting assets to fund digital growth strategies. And those that understand how evolving technology will affect their business over the next 12 months are three times more likely to achieve an above-expectation valuation multiple on their remaining business post-divestment.

Companies should understand what is changing in their sector. If you can’t articulate that story, how can you decide whether to hold on to that business? And if you can’t demonstrate value to potential buyers, you risk leaving money on the table. And that story depends on data — specifically, the ability to distill large amounts of data and create a detailed picture of your portfolio. This data-led approach is essential, whether you’re divesting for bottom-line cost efficiencies or pursuing technology driven top-line opportunities.

As always, we produce the Global Corporate Divestment Study to provide suggestions of how your company can maintain a competitive advantage. This year especially, that means using analytics to maintain a persistent view on your portfolio. It also means understanding potential changes to tax implications — especially in light of US tax reform — as well as bringing your functional areas together to build a strong value story and developing an operational separation plan early.

All of these critical steps will ultimately improve divestment decisions, maximize sale value and help you transform your company — here and now — into what you want it to look like tomorrow.

About this study

The 2018 Global Corporate Divestment Study results are based on interviews with 900 senior corporate executives. The survey was conducted between October and December 2017 by FT Remark, the research and publishing arm of the Financial Times Group.

  • Executives are from companies across the Americas, Asia-Pacific, Europe, the Middle East and Africa.
  • CEOs, CFOs or other C-suite-level executives make up 85% of executives surveyed.
  • Executives have knowledge of or direct hands-on experience with their company’s portfolio review process and have been involved in at least one major divestment in the last three years.
  • About a quarter of corporate executives represent companies with annual revenues of US$1b–US$5b, and 42% represent companies with revenues that exceed US$5b.