Mertz Associates has been completing corporate divestitures for over 25 years. We have the hands-on experience and know-how to help parent companies, operating management and buyer prospects successfully close a transaction. In short, we can help you accomplish your divestiture objective while staying focused on your strategic direction.

Why divest?

Successful companies routinely execute divestitures as part of their growth strategy. Divestitures can help to better focus on core businesses and should be considered for both underperforming units and well-performing non-core units.

There are several good reasons to divest a division, product line or unit:

• Expansion capital-provides a source of capital to re-deploy in core businesses
• Improved focus-allows core management and employees to focus with increased clarity and purpose
• Debt reduction-proceeds can be used to reduce debt
• Alternative to liquidation-finding a strategic owner can be an excellent alternative to liquidation for non-core unit customers, employees and suppliers

Other strategic reasons to divest include risk management, regulatory pressures, competitive performance and shareholder value considerations.

What you should know

Questions to consider as you evaluate divestiture options include:

• What is the impact of the business unit on the rest of the company?
• What is the impact of the company on the unit?
• Does it add value or detract from the overall company’s focus and clarity of purpose?
• What are the real and opportunity costs of retaining the unit?

Keys to success

Regardless of size, divesting a business or product line is a complex and delicate process. However, there are several things you can do to ensure success:

• Evaluation-have measures in place to regularly evaluate business units for possible divestiture; this should be on an ongoing, proactive basis, as part of a company’s strategic portfolio management process
• Preparation-make plans for the overall company to replace the cash flow of the divested unit and reduce corporate overhead
• Assistance-work with advisors who are experts at optimizing value throughout the divestiture process
• People-involve key employees in the process and offer divestiture incentives, but maintain management’s focus on successfully running the operation
• Reinvestment-invest sale proceeds, including both money and management time, in growth opportunities core to the company’s strategic focus