Disposals, non-core assets, corporate assets, restructuring, Strategic advice, corporate finance, adviser

EXECUTIVE COACHING

Non-performing, non-core disposals

Next to the standard transactions I have acquired a special expertise in disposals of non-core corporate assets and executed many disposals of loss making, underinvested and badly managed assets, so far with a 100% success ratio.

Non-core assets are subsidiaries, business units, production sites and or just a team focussing on a particular product range. They no longer form part of the core business of a company, as product portfolios or technologies change. They are like unloved pets, lacking senior management attention and investments. Usually their financial and commercial state deteriorates over time, they become loss making and start to be a major irritation for management and group performance. Especially listed companies exposed to the scrutiny of investors often regret not having dealt with such non-core businesses earlier. As their quality declines, a sale becomes more problematic, sometimes resulting in a negative purchase consideration. The liquidations costs are, however, usually significantly higher.

The sale of such assets is difficult and demanding. Three main issues need to be addressed:

The carve-out of the business, especially when small, can be onerous and slow. Nobody in a company wants to deploy time and effort to a non-performing unit. Precise interfaces need to be defined to allow support services at a cost for a transition phase.
The search for potential buyers requires much creativity and out-of-the-box thinking.
The transaction structure, both commercial and financial, has to minimise / eliminate any risk coming back to the seller.

There is no standard sale procedure. Every transaction is tailor-made and requires careful judgment to execute successfully.

Past experience has shown that non-core disposal processes should minimise the attention that the senior management of the seller has to deploy. An independent, reliable and transparent execution of these divestments can free management to focus on company growth and value creation.