The economic impact of COVID-19 is requiring corporates to focus on their core businesses now more than ever. Many will be reviewing their portfolios to focus on key growth areas. The aim being to allocate capital to core, value generating assets and conclude on appropriate strategies for non-core assets, which may well result in disposals. However, the current M&A market is subdued:
- In Q2 2020 deal volume reduced by 40% whilst deal value declined by a staggering 87%.
- In a recent sell-side survey:
- 70% of sell-side processes are taking six months or longer;
- 93% of sellers felt longer due diligence processes have become more common;
- 87% of sellers wished they had better prepared the target for a sale well in advance of the process beginning; and
- 77% of sellers believed they should have developed a more in-depth insight into potential issues with specific business units prior to launching the sell side process.
Achieving value in the current environment can be challenging. To address this issue, we have developed our Divestment Preparation Programme. This provides a highly structured approach utilising our operational and M&A transaction expertise to ensure that value is not left on the table during on the sale of a division and provides greater certainty on completing the deal.