Global Corporate Divestment Study · Global Corporate Divestment Study Get active Activist...
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Global Corporate Divestment Study EMEIA spotlight ey.com/divest Disruptive technology, monetary policy divergence, sector convergence and changing consumer behavior are driving EMEIA-based companies to take bolder moves to enhance long-term value. We believe that, like in the US, shareholder activists will increasingly influence board decisions around what is considered a core business and what should be bought or sold. As a result, nearly half (48%) of EMEIA-based companies are planning to divest within the next two years, primarily to fund growth and improve portfolio performance. “We expect the pace of digital change alongside almost permanent economic and geopolitical volatility to drive increasing shareholder activism in Europe, and put additional pressure on boards to improve shareholder returns.” Martin Hurst Divestiture Advisory Leader for Europe, the Middle East, India and Africa (EMEIA)
Transcript of Global Corporate Divestment Study · Global Corporate Divestment Study Get active Activist...
Global Corporate Divestment StudyEMEIA spotlightey.com/divest
Disruptive technology, monetary policy divergence, sector convergence and changing consumer behavior are driving EMEIA-based companies to take bolder moves to enhance long-term value. We believe that, like in the US, shareholder activists will increasingly influence board decisions around what is considered a core business and what should be bought or sold.
As a result, nearly half (48%) of EMEIA-based companies are planning to divest within the next two years, primarily to fund growth and improve portfolio performance.
“We expect the pace of digital change alongside almost permanent economic and geopolitical volatility to drive increasing shareholder activism in Europe, and put additional pressure on boards to improve shareholder returns.”
Martin HurstDivestiture Advisory Leader for Europe,
the Middle East, India and Africa (EMEIA)
Global Corporate Divestment Study
Get activeActivist shareholders are an increasingly important part of corporate life. Although only 10% of Eurozone companies have activist shareholders, that figure is rising quickly. In the UK, it has reached 50% according to S&P Capital IQ.
Compared to EMEIA, twice the number of respondents in the Americas consider activist shareholder concerns to be drivers of divestment activity. However, with low economic growth, pressure on companies’ operating models from digital change and continuing pressure from investors, companies across EMEIA should rigorously assess their portfolios and focus on what they do best.
of EMEIA-based companies say access to accurate, comprehensive data is a key portfolio review challenge
49%
of EMEIA-based companies say concerns related to shareholder activism triggered their most recent major divestment, compared to 28% in the Americas
14%
Invest in core business
Invest in new products/markets/geographies
Make an acquisition
Return funds to shareholders
Pay down debt39%
21%
30%
21%6%
23%
20%
12%
19%
9%
Americas: 57% divested to fund growth
EMEIA: 72% divested to fund growth
Access better dataCompanies are beginning to address the need for sufficiently detailed analysis of their portfolio reviews. The proliferation of both internal and external data often makes it difficult for companies to analyze, understand and apply that data in a meaningful and integrated way ahead of third parties (e.g., shareholder activists and potential buyers). To better understand portfolio performance and develop a value story, vendors need to produce and stress-test data and set KPIs relevant to the buyer.
Divest for growthSuccessful vendors plan for the sale, but they also plan for how to use the proceeds. EMEIA-based companies are more focused than Americas–based companies on using divestments to drive growth. In particular, they are more likely to use divestment proceeds for acquisitions. We believe this is because acquisitions are seen as a way for companies to rebalance their capital allocation strategies to respond to the challenges in the Eurozone and look for new opportunities for growth. The study shows that those who use divestment proceeds for growth, and acquisitions in particular, are more likely to experience a higher valuation multiple in the remaining business.
Contacts for Europe, Middle East, India and AfricaMartin Hurst Europe, Middle East, India and Africa
[email protected] +49 6196 996 27365
Carsten Kniephoff Germany, Switzerland and Austria
[email protected] +49 40 36132 17664
Jasper Knol Bruins Belgium and the Netherlands
[email protected] +31 88 407 20 96
Pawel Bukowinski Central and Southeast Europe
[email protected] +48 22 557 84 24
Phil Gandier Middle East and North Africa
[email protected] +966 11 215 9850
Hassan Alami France, Maghreb and Luxembourg
[email protected] +33 1 46 93 72 78
Vegard Stevning Nordics Region
[email protected] +47 24 00 27 08
Matthew Lee Africa
[email protected] +27 11 77 2 3025
Charles Honnywill United Kingdom and Ireland
[email protected] +44 20 7951 4058
Giuseppe Donatelli Mediterranean Region
[email protected] +39 06 6753 5728
Dmitry Migel Russia and the Commonwealth of Independent States
[email protected] +7 495 662 93 09
Chris Locke Financial Services
[email protected] +44 20 7951 1326
About the study“Our data-driven analytical
approach to strategic portfolio optimization helps our clients prioritize, while our value bridge focuses on the complete transaction value equation.”
Martin HurstDivestiture Advisory Leader for Europe, the Middle East, India and Africa (EMEIA)
EMEIA spotlight
This year’s Global Corporate Divestment Study focuses on the critical lessons that corporations can learn from private equity, relating to portfolio reviews, divestment strategy and execution. It is based on interviews with 900 global C-suite executives, 360 of whom were from companies in EMEIA (Europe, the Middle East, India and Africa).
How we can helpImproving divestment value requires:
• A buyer’s view of your business• Granular data transparency• A robust, well-organized process between signing and closing
Our goal is to help clients realize value, accelerate close and reduce/limit business disruptions. We help clients reach their strategic goals, optimize their portfolios, evaluate divestiture risks and rewards, and prepare themselves to execute the transaction.
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