What is divestiture?
Whether you are deciding to exit from your business or looking to focus on your core operations, selling part of your business can be a successful way to increase your liquidity and leave your company better off. This process of selling off a portion of your business is known as divestiture, and it should be carefully planned to maximise your sale price and leave your business strong.
When should you sell part of your business?
Selling a part of your business can be beneficial by allowing you to free up cash flow from non-core business activities and honing your strategic focus as a firm. When you are analysing what part of your business to sell, focus on non-core activities that aren’t related to your business strategy. This allows you to focus on core competencies that distinguish your business from competitors, and often have higher profit margins.
Potential buyers may only be searching for specific business units and might not be interested in your business as a whole if it doesn’t fit into their organisation. Selling a portion of your business when you have assets that are superfluous to your activities, but are sought after by other firms can allow you to take advantage of this.
What should you look out for when selling part of your business?
Selling a portion of your business is likely to affect how your business operates as divested business units are linked to the rest of your business. This transition should be planned to minimise disruptions to the overall business, and this should begin with evaluating your business’ organisational structure to maintain cohesion across all business units. Understanding your business’ capabilities and how your divestiture will affect them will be greatly beneficial, particularly when you are planning for how your business will operate in the future.
Find out more
Quinn M&A can provide expert advice to assist you with valuing and selling a part of your business. For more information call us on +612 9223 9166 or submit an Express Enquiry.