Welcome!

Big Data Journal Authors: Elizabeth White, Pat Romanski, Richard Moulds, Martin Etmajer, Roger Strukhoff

News Feed Item

80% of Global Executives that Pursued a Strategic Divestment over Past Two Years Saw Positive Impact on Valuation According to EY Global Divestiture Survey

Of companies that divested, 88% left money on the table

NEW YORK, Jan. 20, 2014 /PRNewswire/ -- Eighty percent of executives that based divestment decisions on a strategic portfolio review saw an increase in value, according to a new report from EY. The annual 2014 Global Corporate Divestment Survey, which surveyed more than 700 corporate executives globally, also reveals that 88% of companies left money on the table, at a time when no company can afford to lose deal value.

(Logo: http://photos.prnewswire.com/prnh/20130701/NY40565LOGO-b )

In terms of options, 55% of global executives would consider a full sale of their business compared to 34% who would opt for a carve-out and 14% an IPO.

"We're seeing more interest in divestiture activity both globally and in the Americas," said Paul Hammes, Global and Americas Divestiture Advisory Services Leader Transaction Advisory Services. "After hunkering down for a long period of uncertainty, more executives feel ready to make strategic choices that focus on strengthening companies' core offerings and ensuring long-term growth."

Survey Reveals 3 Leading Practices:

EY's survey results revealed three best practices to consider when undertaking a divestiture:

First, companies must know their core business. By assessing core competencies, redefining the operating model and understanding differentiators, companies improve investment focus.   85% of respondents saw an increased valuation multiple in the remaining business by basing the divestment on an updated definition of core operations.

Second, make better-informed decisions.  This happens when senior management leads portfolio reviews and diversely skilled teams analyze robust business unit performance and industry benchmarks. Executives believe that improved industry benchmarks (45%) and better business unit data (39%) would increase portfolio review efficacy.

Third, act strategically. Divestments are strategic tools. When companies think of them as such and act on portfolio-review findings, it increases valuation multiples post-sale.  Fifty three percent of executives believe portfolio reviews would be more valuable if companies dedicated resources to act on review results.

"These leading practices might seem obvious, however, it is surprising how many companies do not consider all of these when doing a divestiture -- causing them to leave money on the table and miss out on full value of the deal," said Hammes.

Drivers for Divestment in Key Sectors

As with all aspects of M&A, different factors drive divestment activity across industries. Life Sciences should be the most active divesting sector, with 41% of companies expecting to sell in the next two years – the main reason being regulatory change.

The key driver for divestments in Consumer Products is off-trend products (58%), followed by 44% who said reduced demand or market share would make them consider divesting. 

In the fast moving Tech sector, half of executives said the biggest trend prompting them to consider divestments is big data and analytics developments, followed by cloud innovations and mobile as companies re-evaluate their core business and competitive positions.

Why Divest Now?

Divesting business units that are no longer strategically aligned with companies' core offering allows management to reallocate capital to higher-growth areas, and helps them create a more focused, better defined organization that investors value.

"We live with continuous change," added Hammes. "Whether it is technological innovation, shifting consumer demands or increased investor scrutiny, companies need to be proactive in actively managing their business portfolios, effectively allocating capital, meeting market needs, and driving long-term growth as no company can afford to lose value."

Planned divestments and the M&A story for 2014

The divestment plans of global executives will be a vital part of a developing M&A story for 2014. January could see the highest value recorded in the first month of the year in some time with three US$10b+ megadeals already announced in US, we are seeing a very robust start to 2014.

"Given some of the recent merger activity I think we may be in the initial phases of an M&A uptick," concluded Rich Jeanneret, Americas Vice Chair of Transaction Advisory Services (TAS) at EY. "Executives are continuing to proceed cautiously and are making fewer big bets than in the past. Ultimately the level of merger activity in the coming year will be determined by the degree of confidence in the macroeconomic environment and political stability."

Notes to Editors

About the survey

The EY Global Corporate Divestment Study analyzes leading portfolio review and divestment strategies and provides insights around a central thesis: Strategic portfolio management leads to improved divestment outcomes.

Results are based on 720 interviews with corporate executives surveyed over September and October 2013 by FT Remark, the research and publishing arm of the Financial Times Group.

The survey includes respondents from the Americas, Asia Pacific, Europe, the Middle East and Africa. While a broad range of industries is included, the study focuses on five key sectors: consumer products, life sciences, oil and gas, power and utilities and technology. Respondents stated that they have direct knowledge of or hands-on experience with their company's portfolio review and divestment activity.

About EY

EY is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 175,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Ernst & Young LLP is a member firm serving clients in the US. For more information about our organization, please visit ey.com.

This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.

SOURCE EY

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Cloud Expo Breaking News
Cloud Computing is evolving into a Big Three of Amazon Web Services, Google Cloud, and Microsoft Azure. Cloud 360: Multi-Cloud Bootcamp, being held Nov 4–5, 2014, in conjunction with 15th Cloud Expo in Santa Clara, CA, delivers a real-world demonstration of how to deploy and configure a scalable and available web application on all three platforms. The Cloud 360 Bootcamp, led by Janakiram MSV, an analyst with Gigaom Research, is the first bootcamp that introduces the core concepts of Infrastructure as a Service (IaaS) based on the workings of the Big Three platforms – Amazon EC2, Google Compute Engine, and Azure VMs. Bootcamp attendees will get to see the big picture and also receive the knowledge needed to make the best cloud decisions for their business applications and entire enterprise IT organization.
Scott Jenson leads a project called The Physical Web within the Chrome team at Google. Project members are working to take the scalability and openness of the web and use it to talk to the exponentially exploding range of smart devices. Nearly every company today working on the IoT comes up with the same basic solution: use my server and you'll be fine. But if we really believe there will be trillions of these devices, that just can't scale. We need a system that is open a scalable and by using the URL as a basic building block, we open this up and get the same resilience that the web enjoys.
The Internet of Things is a natural complement to the cloud and related technologies such as Big Data, analytics, and mobility. In his session at Internet of @ThingsExpo, Joe Weinman will lay out four generic strategies – digital disciplines – to exploit emerging digital technologies for strategic advantage. Joe Weinman has held executive leadership positions at Bell Labs, AT&T, Hewlett-Packard, and Telx, in areas such as corporate strategy, business development, product management, operations, and R&D.
SYS-CON Events announced today that DevOps.com has been named “Media Sponsor” of SYS-CON's “DevOps Summit at Cloud Expo,” which will take place on June 10–12, 2014, at the Javits Center in New York City, New York. DevOps.com is where the world meets DevOps. It is the largest collection of original content relating to DevOps on the web today Featuring up-to-the-minute news, feature stories, blogs, bylined articles and more, DevOps.com is where the thought leaders of the DevOps movement make their ideas known.
There are 182 billion emails sent every day, generating a lot of data about how recipients and ISPs respond. Many marketers take a more-is-better approach to stats, preferring to have the ability to slice and dice their email lists based numerous arbitrary stats. However, fundamentally what really matters is whether or not sending an email to a particular recipient will generate value. Data Scientists can design high-level insights such as engagement prediction models and content clusters that allow marketers to cut through the noise and design their campaigns around strong, predictive signals, rather than arbitrary statistics. SendGrid sends up to half a billion emails a day for customers such as Pinterest and GitHub. All this email adds up to more text than produced in the entire twitterverse. We track events like clicks, opens and deliveries to help improve deliverability for our customers – adding up to over 50 billion useful events every month. While SendGrid data covers only abo...
SYS-CON Events announced today that the Web Host Industry Review has been named “Media Sponsor” of SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Since 2000, The Web Host Industry Review has made a name for itself as the foremost authority of the Web hosting industry providing reliable, insightful and comprehensive news, reviews and resources to the hosting community. TheWHIR Blogs provides a community of expert industry perspectives. The Web Host Industry Review Magazine also offers a business-minded, issue-driven perspective of interest to executives and decision-makers. WHIR TV offers on demand web hosting video interviews and web hosting video features of the key persons and events of the web hosting industry. WHIR Events brings together like-minded hosting industry professionals and decision-makers in local communities. TheWHIR is an iNET Interactive property.
SYS-CON Events announced today that O'Reilly Media has been named “Media Sponsor” of SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. O'Reilly Media spreads the knowledge of innovators through its books, online services, magazines, and conferences. Since 1978, O'Reilly Media has been a chronicler and catalyst of cutting-edge development, homing in on the technology trends that really matter and spurring their adoption by amplifying "faint signals" from the alpha geeks who are creating the future. An active participant in the technology community, the company has a long history of advocacy, meme-making, and evangelism.
SYS-CON Events announced today that Verizon has been named “Gold Sponsor” of SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Verizon Enterprise Solutions creates global connections that generate growth, drive business innovation and move society forward. With industry-specific solutions and a full range of global wholesale offerings provided over the company's secure mobility, cloud, strategic networking and advanced communications platforms, Verizon Enterprise Solutions helps open new opportunities around the world for innovation, investment and business transformation. Visit verizonenterprise.com to learn more.
SYS-CON Events announced today that TMCnet has been named “Media Sponsor” of SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Technology Marketing Corporation (TMC) is the world's leading business to business and integrated marketing media company, servicing niche markets within the communications and technology industries.
"In my session I spoke about enterprise cloud analytics and how we can leverage analytics as a service," explained Ajay Budhraja, CTO at the Department of Justice, in this SYS-CON.tv interview at the 14th International Cloud Expo®, held June 10-12, 2014, at the Javits Center in New York City. Cloud Expo® 2014 Silicon Valley, November 4–6, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading Cloud industry players in the world.
“We are starting to see people move beyond the commodity cloud and enterprises need to start focusing on additional value added services in order to really drive their adoption," explained Jason Mondanaro, Director of Product Management at MetraTech, in this SYS-CON.tv interview at the 14th International Cloud Expo®, held June 10-12, 2014, at the Javits Center in New York City. Cloud Expo® 2014 Silicon Valley, November 4–6, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading Cloud industry players in the world.
"We are automated capacity control software, which basically looks at all the supply and demand and running a virtual cloud environment and does a deep analysis of that and says where should things go," explained Andrew Hillier, Co-founder & CTO of CiRBA, in this SYS-CON.tv interview at the 14th International Cloud Expo®, held June 10-12, 2014, at the Javits Center in New York City. Cloud Expo® 2014 Silicon Valley, November 4–6, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading Cloud industry players in the world.
Almost everyone sees the potential of Internet of Things but how can businesses truly unlock that potential. The key will be in the ability to discover business insight in the midst of an ocean of Big Data generated from billions of embedded devices via Systems of Discover. Businesses will also need to ensure that they can sustain that insight by leveraging the cloud for global reach, scale and elasticity. In his session at Internet of @ThingsExpo, Mac Devine, Distinguished Engineer at IBM, will discuss bringing these three elements together via Systems of Discover.
The Internet of Things promises to transform businesses (and lives), but navigating the business and technical path to success can be difficult to understand. In his session at 15th Internet of @ThingsExpo, Chad Jones, Vice President, Product Strategy of LogMeIn's Xively IoT Platform, will show you how to approach creating broadly successful connected customer solutions using real world business transformation studies including New England BioLabs and more.
All too many discussions about DevOps conclude that the solution is an all-purpose player: developer and operations guru, complete with pager for round-the-clock duty. For most organizations that is not the way forward. In his session at DevOps Summit, Bernard Golden, Vice President of Strategy at ActiveState, will discuss how to achieve the agility and speed of end-to-end automation without requiring an organization stocked with Supermen and Superwomen.