How the best divest

The Idea in Brief

If your company's like most, it's geared up to buy assets, not sell them. So when you decide to divest a business, you risk doing it at the wrong time or in the wrong way.

To make the right divestiture decisions, apply these four rules recommended by Mankins, Harding, and Weddigen:

  • Establish a team focused on divesting.
  • Divest businesses that don't fit with your company's long-term strategy and that would create more value in another firm's portfolio.
  • Make robust plans to separate out the divested businesses.
  • Clearly communicate what's in the deal for buyers and employees.
  • Companies that apply these rules strengthen their core and create twice as much value for shareholders. Take Weyerhauser. Through its disciplined divesting, the forest-products company transformed itself from a traditional pulp-and-paper company into a leader in timber, building materials, and real estate. And it's produced some of the highest returns in its sector.

Read the full article on Harvard Business Online.