Cambridge Business Association
Don't Miss the Exit
Report

Don't Miss the Exit

Creating Shareholder Value through Divestitures

Jens Kengelbach, Alexander Roos and Georg Keienburg
Boston Consulting Group, 2014
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Editorial Rating

8

Qualities

  • Innovative

Recommendation

Mergers and acquisitions are on the rise, and many of these deals involve divestitures. For some firms, divestitures provide a way to raise cash and to deleverage. For others, divestitures can realign portfolios. Regardless of the reason for divesting, transactions can go terribly wrong for companies that don’t plan carefully or pick the right exit route. This concise article from Jens Kengelback, Alexander Roos and Georg Keienburg of the Boston Consulting Group provides keen insights into divestment strategies, investor reactions, and the potential pros and cons for companies. getAbstract recommends it to senior executives charged with planning and crafting divestitures.

Summary

After a lackluster year for mergers and acquisitions in 2013, the market picked up steam in 2014. In 2014’s first six months, the value of M&A transactions shot up 62% over the same 2013 period, with megadeals – those upward of $10 billion each – responsible for more than one-third of first-half values. The United States and Canada saw growth, particularly in the technology sector, while other regions of the world experienced flat or falling transaction values. Responsive debt markets, high cash levels within companies and private equity firms, and shareholders pressing for the productive use of that cash...

About the Authors

Jens Kengelback, Alexander Roos and Georg Keienburg work at various German branches of the Boston Consulting Group.

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