|By PR Newswire||
|January 20, 2014 10:00 AM EST||
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.
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.
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.
Join us at Cloud Expo | @ThingsExpo 2016 – June 7-9 at the Javits Center in New York City and November 1-3 at the Santa Clara Convention Center in Santa Clara, CA – and deliver your unique message in a way that is striking and unforgettable by taking advantage of SYS-CON's unmatched high-impact, result-driven event / media packages.
May. 31, 2016 12:00 PM EDT Reads: 2,608
SYS-CON Events announced today that Hanu Software will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Leveraging best-in-class people, processes, and technologies, Hanu provides high-quality, high-value software development and business process outsourcing services to independent software vendors (ISVs) and enterprises.
May. 31, 2016 12:00 PM EDT Reads: 1,496
As cloud and storage projections continue to rise, the number of organizations moving to the cloud is escalating and it is clear cloud storage is here to stay. However, is it secure? Data is the lifeblood for government entities, countries, cloud service providers and enterprises alike and losing or exposing that data can have disastrous results. There are new concepts for data storage on the horizon that will deliver secure solutions for storing and moving sensitive data around the world. ...
May. 31, 2016 12:00 PM EDT Reads: 1,493
As organizations shift towards IT-as-a-service models, the need for managing and protecting data residing across physical, virtual, and now cloud environments grows with it. Commvault can ensure protection, access and E-Discovery of your data – whether in a private cloud, a Service Provider delivered public cloud, or a hybrid cloud environment – across the heterogeneous enterprise. In his general session at 18th Cloud Expo, Randy De Meno, Chief Technologist - Windows Products and Microsoft Part...
May. 31, 2016 11:45 AM EDT Reads: 886
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, will provide an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life ...
May. 31, 2016 11:45 AM EDT Reads: 2,108
The cloud era has reached the stage where it is no longer a question of whether a company should migrate, but when. Enterprises have embraced the outsourcing of where their various applications are stored and who manages them, saving significant investment along the way. Plus, the cloud has become a defining competitive edge. Companies that fail to successfully adapt risk failure. The media, of course, continues to extol the virtues of the cloud, including how easy it is to get there. Migrating...
May. 31, 2016 11:30 AM EDT Reads: 831
SYS-CON Events announced today that IBM Cloud Data Services has been named “Bronze Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. IBM Cloud Data Services offers a portfolio of integrated, best-of-breed cloud data services for developers focused on mobile computing and analytics use cases.
May. 31, 2016 11:30 AM EDT Reads: 1,631
SYS-CON Events announced today that Super Micro Computer, Inc., a global leader in Embedded and IoT solutions, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Supermicro (NASDAQ: SMCI), the leading innovator in high-performance, high-efficiency server technology, is a premier provider of advanced server Building Block Solutions® for Data Center, Cloud Computing, Enterprise IT, Hadoop/Big Data, HPC and ...
May. 31, 2016 11:15 AM EDT Reads: 903
18th Cloud Expo, taking place June 7-9, 2016, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterprises are using some...
May. 31, 2016 11:00 AM EDT Reads: 3,267
Cloud computing delivers on-demand resources that provide businesses with flexibility and cost-savings. The challenge in moving workloads to the cloud has been the cost and complexity of ensuring the initial and ongoing security and regulatory (PCI, HIPAA, FFIEC) compliance across private and public clouds. Manual security compliance is slow, prone to human error, and represents over 50% of the cost of managing cloud applications. Determining how to automate cloud security compliance is critical...
May. 31, 2016 11:00 AM EDT Reads: 1,912
SYS-CON Events announced today that MobiDev will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. MobiDev is a software company that develops and delivers turn-key mobile apps, websites, web services, and complex software systems for startups and enterprises. Since 2009 it has grown from a small group of passionate engineers and business managers to a full-scale mobile software company with over 200 develope...
May. 31, 2016 10:15 AM EDT Reads: 2,909
How will your company move to the cloud while ensuring a solid security posture? Organizations from small to large are increasingly adopting cloud solutions to deliver essential business services at a much lower cost. According to cyber security experts, the frequency and severity of cyber-attacks are on the rise, causing alarm to businesses and customers across a variety of industries. To defend against exploits like these, a company must adopt a comprehensive security defense strategy that is ...
May. 31, 2016 09:45 AM EDT Reads: 913
SoftLayer operates a global cloud infrastructure platform built for Internet scale. With a global footprint of data centers and network points of presence, SoftLayer provides infrastructure as a service to leading-edge customers ranging from Web startups to global enterprises. SoftLayer's modular architecture, full-featured API, and sophisticated automation provide unparalleled performance and control. Its flexible unified platform seamlessly spans physical and virtual devices linked via a world...
May. 31, 2016 09:00 AM EDT Reads: 2,440
SYS-CON Events announced today that BMC Software has been named "Siver Sponsor" of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2015 at the Javits Center in New York, New York. BMC is a global leader in innovative software solutions that help businesses transform into digital enterprises for the ultimate competitive advantage. BMC Digital Enterprise Management is a set of innovative IT solutions designed to make digital business fast, seamless, and optimized from mainframe to mo...
May. 31, 2016 08:45 AM EDT Reads: 2,421
SYS-CON Events announced today that Catchpoint Systems, Inc., a provider of innovative web and infrastructure monitoring solutions, has been named “Silver Sponsor” of SYS-CON's DevOps Summit at 18th Cloud Expo New York, which will take place June 7-9, 2016, at the Javits Center in New York City, NY. Catchpoint is a leading Digital Performance Analytics company that provides unparalleled insight into customer-critical services to help consistently deliver an amazing customer experience. Designed...
May. 31, 2016 08:15 AM EDT Reads: 2,140
"What we see what happens when you have a completely networked society and the potential to now drive the value creation and the collaboration and the ecosystems that are possible when you start to be able to connect people and industries together in ways that have never been possible before," explained Esmeralda Swartz, VP of Marketing Enterprise & Cloud at Ericsson, in this SYS-CON.tv interview at @ThingsExpo, held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA.
May. 31, 2016 08:15 AM EDT Reads: 1,839
Companies can harness IoT and predictive analytics to sustain business continuity; predict and manage site performance during emergencies; minimize expensive reactive maintenance; and forecast equipment and maintenance budgets and expenditures. Providing cost-effective, uninterrupted service is challenging, particularly for organizations with geographically dispersed operations.
May. 31, 2016 08:00 AM EDT Reads: 2,350
In today's enterprise, digital transformation represents organizational change even more so than technology change, as customer preferences and behavior drive end-to-end transformation across lines of business as well as IT. To capitalize on the ubiquitous disruption driving this transformation, companies must be able to innovate at an increasingly rapid pace. Traditional approaches for driving innovation are now woefully inadequate for keeping up with the breadth of disruption and change facin...
May. 31, 2016 07:45 AM EDT Reads: 1,727
The Internet of Things (IoT) is growing rapidly by extending current technologies, products and networks. By 2020, Cisco estimates there will be 50 billion connected devices. Gartner has forecast revenues of over $300 billion, just to IoT suppliers. Now is the time to figure out how you’ll make money – not just create innovative products. With hundreds of new products and companies jumping into the IoT fray every month, there’s no shortage of innovation. Despite this, McKinsey/VisionMobile data...
May. 31, 2016 07:45 AM EDT Reads: 1,845
The IoTs will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, will demonstrate how to move beyond today's coding paradigm and share the must-have mindsets for removing complexity from the development proc...
May. 31, 2016 06:00 AM EDT Reads: 2,036