WSJ.com

Companies Hate to Sell Business Units. That's a Big Mistake.

Companies willing to study how well all their businesses contribute to their core—and to take action on those that don't fit—have a stronger chance for growth.

著者：James Allen

First published on 11月 03, 2017
min read


This article originally appeared on WSJ.com. Executives tend to shy away from divesting noncore businesses. They’re reluctant to shed revenue, fear the market’s reaction to a smaller company and don’t want the challenge of stranded costs. They reason that the business could improve in time. But sometimes, there are good reasons to divest. When strategically selected to clean up a company’s portfolio and designed to command an optimal price, divestitures can generate significant shareholder value. They can also serve as a catalyst to improve the remaining business. When done well, they reduce complexity and provide fuel for the company to pump back into its core. As part of our ongoing work with divestitures, my colleagues at Bain & Co. studied more than 2,100 public companies and found those engaging in focused divestment outperform inactive companies by about 15% over a 10-year period, as measured by total shareholder return. The results are even better for companies that combine focused divestments with a repeatable M&A model. They outperform inactive companies by nearly 40% over a 10-year period and generate more than twice the sales and profit growth. From our experience working with companies across industries, we’ve identified four processes that enable successful divesting. Actively manage the portfolio. Start with the basics of understanding how all of your businesses contribute to your core and regularly assess them for fit. What is each business’s competitive position and ability to win? Do you have the right resources and capabilities to take it to full potential? If not, are there other companies where it would be a better fit? Only by systematically assessing your portfolio can you identify the business units that would deliver more value in another owner’s hands. In the pharmaceutical industry, for example, Bain found that companies combining leadership of product or treatment categories with a sharp portfolio focus deliver annual total shareholder returns that are more than twice those of companies with diversified portfolios that maintain a tail of smaller positions. Don’t race to sell the asset. Create a blueprint for making it attractive prior to selling—even better, begin implementing some of those initiatives prior to sale. We have found that 6 to 12 months is the right length of time to establish the blueprint and demonstrate progress. This allows you to improve the value of the business while you still own it, and also demonstrates to a potential buyer what is possible. A U.S. aerospace company believed that it would not find a buyer for one of its noncore business units. It was pursuing a sale process, although leadership internally believed that its only option was to spin off the unit as a stand-alone company. In the process of preparing an equity story and separation program for the business unit, it identified ways in which the business could thrive outside of the parent. The aerospace company saw far more potential than it had anticipated, in both revenue growth and cost opportunities, and it embarked on a broad-ranging cost initiative. This process helped give confidence to a buyer, leading to a transaction in which the buyer later announced a program based heavily on that cost initiative. Show buyers how they can create value. Many sellers leave money on the table by shortcutting the divestiture process. They may call an investment banker, put an offering memorandum together and move as fast as they can. But companies with the strongest track records take a more thoughtful approach. They perform reverse due diligence to help decide who could create more value and how it could be created—critical knowledge that helps a seller negotiate the best deal. Make the remaining company future-ready. The deal’s been made. It’s now critical to carve out the old business, through a process that neither imposes risk on the business nor distracts the team. The best companies establish a separation management office to plan and execute the carve-out while controlling one-off costs and managing service agreement commitments. They develop a thoughtful internal and external communications plan and optimize the remaining company’s operating model. Divestitures are an important tool in a senior leadership team’s arsenal. They are complex, however, and many companies’ muscles are not as well-developed for divestitures as they are for acquisitions. Companies that regularly prune their portfolio, take an active hand in preparing assets for sale, manage the separation and use the sale funds to acquire core assets in a repeatable M&A program make divesting attractive for buyers and sellers. James Allen is co-leader of the global strategy practice at Bain & Co. and co-author of “The Founder’s Mentality.”

This article originally appeared on WSJ.com.

Executives tend to shy away from divesting noncore businesses. They’re reluctant to shed revenue, fear the market’s reaction to a smaller company and don’t want the challenge of stranded costs. They reason that the business could improve in time.

But sometimes, there are good reasons to divest. When strategically selected to clean up a company’s portfolio and designed to command an optimal price, divestitures can generate significant shareholder value. They can also serve as a catalyst to improve the remaining business. When done well, they reduce complexity and provide fuel for the company to pump back into its core.

As part of our ongoing work with divestitures, my colleagues at Bain & Co. studied more than 2,100 public companies and found those engaging in focused divestment outperform inactive companies by about 15% over a 10-year period, as measured by total shareholder return. The results are even better for companies that combine focused divestments with a repeatable M&A model. They outperform inactive companies by nearly 40% over a 10-year period and generate more than twice the sales and profit growth.

From our experience working with companies across industries, we’ve identified four processes that enable successful divesting.

Actively manage the portfolio. Start with the basics of understanding how all of your businesses contribute to your core and regularly assess them for fit. What is each business’s competitive position and ability to win? Do you have the right resources and capabilities to take it to full potential? If not, are there other companies where it would be a better fit? Only by systematically assessing your portfolio can you identify the business units that would deliver more value in another owner’s hands. In the pharmaceutical industry, for example, Bain found that companies combining leadership of product or treatment categories with a sharp portfolio focus deliver annual total shareholder returns that are more than twice those of companies with diversified portfolios that maintain a tail of smaller positions.

Don’t race to sell the asset. Create a blueprint for making it attractive prior to selling—even better, begin implementing some of those initiatives prior to sale. We have found that 6 to 12 months is the right length of time to establish the blueprint and demonstrate progress. This allows you to improve the value of the business while you still own it, and also demonstrates to a potential buyer what is possible.

A U.S. aerospace company believed that it would not find a buyer for one of its noncore business units. It was pursuing a sale process, although leadership internally believed that its only option was to spin off the unit as a stand-alone company. In the process of preparing an equity story and separation program for the business unit, it identified ways in which the business could thrive outside of the parent. The aerospace company saw far more potential than it had anticipated, in both revenue growth and cost opportunities, and it embarked on a broad-ranging cost initiative. This process helped give confidence to a buyer, leading to a transaction in which the buyer later announced a program based heavily on that cost initiative.

Show buyers how they can create value. Many sellers leave money on the table by shortcutting the divestiture process. They may call an investment banker, put an offering memorandum together and move as fast as they can. But companies with the strongest track records take a more thoughtful approach. They perform reverse due diligence to help decide who could create more value and how it could be created—critical knowledge that helps a seller negotiate the best deal.

Make the remaining company future-ready. The deal’s been made. It’s now critical to carve out the old business, through a process that neither imposes risk on the business nor distracts the team. The best companies establish a separation management office to plan and execute the carve-out while controlling one-off costs and managing service agreement commitments. They develop a thoughtful internal and external communications plan and optimize the remaining company’s operating model.

Divestitures are an important tool in a senior leadership team’s arsenal. They are complex, however, and many companies’ muscles are not as well-developed for divestitures as they are for acquisitions. Companies that regularly prune their portfolio, take an active hand in preparing assets for sale, manage the separation and use the sale funds to acquire core assets in a repeatable M&A program make divesting attractive for buyers and sellers.

James Allen is co-leader of the global strategy practice at Bain & Co. and co-author of “The Founder’s Mentality.”