Edson Gissoni/Rual Rousselet - Executive Partner / Marcelo Miraglia – Senior Partner at DMS PARTNERS
In times of scarce capital and increasingly rare lines of credit, or when existing, very expensive or with requirements for real guarantees, which often exceed 130% of the amount of credit requested, companies and entrepreneurs turn to their homes, in search for possible alternatives that can help capitalize the company and reduce dependence on third-party resources.
Studies and research by large consulting companies, such as E&Y and Deloitte, indicate the increasing interest of CEOs and Presidents of companies in the topic of Divestment, not just as a specific activity of companies in times of crisis, but as a strategic and recurring differentiator .
In the case of large companies, the theme of Divestment is so comprehensive that it can range from identifying industrial assets that can be divested, such as machines and equipment that are no longer operational, to the sale of a portfolio of products or services that are no longer operational. is no longer as profitable or is not reflected in the company's market focus strategy. In global companies, sales operations of subsidiaries, industrial or commercial units in geographies that are no longer priority, become common in a process known in the market as “carve-out”.
Recent research indicates that most CEOs and business owners have become aware that they need to improve their product portfolio analysis and asset management in order to better capitalize on possible Divestment opportunities. This, however, requires a more dynamic management of companies' assets and their product portfolio, activities that are often relegated to a secondary level within the priorities of the companies' executive body, as they are not considered as attractive as directly associated activities. to the reason for the purpose of its operations.
In the case of small and medium-sized companies, in addition to the total or partial sale of the company, more and more owners feel the need to keep their companies as “lean” as possible, and this includes efficient management of their assets. Industrial assets that are not operational are, at the very least, taking up unnecessary space, often covered by expensive insurance and requiring maintenance so that they do not become obsolete or scrap. Decommissioned business units, including industrial plants, can and should be
made available for sale, becoming sources of capital. The same can happen with vehicle fleets or stocks of unmarketed finished products or raw materials and inputs.
And why divest? There are many motivators, but here are some of the most common ones:
• Raise capital as a solution to reduce debt
• Optimize the company's operating model as a whole
• Raise capital to invest in the company's core business
• Free up capital to invest in new businesses
• Raise capital to invest in new technologies
• Improve asset management through strategic partnerships
• Transform fixed costs into variables
• Optimize and rationalize spaces
And which assets can be subject to Divestment?
• The company itself and its entire structure (total sale)
• Part of the company or business units (partial sale)
• Part of the company's portfolio of products and/or services
• Properties (industrial areas, warehouses, farms, houses, farms, apartments and others,
in short, everything that can be made available)
• Machines and Equipment in different areas and applications
• Facilities and “utilities”
• Inventories and Stocks: Finished products + Raw Material + Inputs + Materials
Obsolete + “Slow Moving” and “No Moving”
• Vehicles
• Furniture and utensils
• Hardware and Software
• Materials and Equipment for IN and OUT Logistics Operations
• Assets in third parties
And what would be the possible destinations for the Divested assets?
• Sale to third parties
• Internal or External Transfer
• Recycling
• Scrapping
And how can DMS PARTNERS help its clients in the Divestment process?
Our highly trained professionals with recognized experience in structuring divestment projects can support your company in the different phases of the operation, offering our services in areas such as:
• Identification and validation of Assets subject to Divestment
• Classification of the possible destination for the available Asset
• Proposal and validation of the allocation of available assets
• Assessment of the estimated value of the available asset (“valuation”)
• Support on the possible accounting implications of the divestment of available assets
(carried out by the company's accounting/audit department or by contracted third parties)
• Identification and validation of potential buyers for assets available for
sale
• Preparation of prospectus (teaser) of assets available for sale
• Presentation of assets to potential buyers
• Selection and validation of the best buyers
• Negotiation of the sale of assets
• Closing of the sale of assets
• Logistics management of disinvested materials
References: E&Y - CEO Outlook October 2022 on Divestment
E&Y - Global Corporate Divestment Study 2021
Deloitte - 2022 Global Diversity Survey
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