Corporate Divestitures: A Mergers and Acquisitions Best Practices Guide

PREFACE XI

ACKNOWLEDGMENTS XV

CHAPTER 1 INTRODUCTION 1

1.1 Overview 2

1.2 Characteristics of Corporate Divestitures 3

1.3 Transaction Model 10

1.4 Staffi ng Model 15

1.5 Enabling Principles 23

1.6 How This Guide Can Help 27

Key Points 30

Appendix 1A Divestiture Activity by Standard Industrial Classification: 2002 to 2006 32

Appendix 1B Aggressive Divesters: 2005 and 2006 33

CHAPTER 2 STRATEGIC ASSESSMENT 34

2.1 Overview 35

2.2 Strategic Assessment Process Steps 36

2.3 Analyze Portfolio and Consider Alternatives 37

2.4 Opt for Divestiture 41

2.5 Position the Organization for the Divestiture 46

2.6 Next Steps 52

Key Points 52

CHAPTER 3 DIVESTITURE PLANNING 54

3.1 Overview 55

3.2 Planning Phase Process Steps 60

3.3 Approval 62

3.4 Organization Plan 70

3.5 Retention Plan 74

3.6 Assembling the Divestiture Team 78

3.7 Development of the Divestiture Plan 86

3.8 Development of a Communication Plan 89

Key Points 95

Appendix 3A Illustrative Divestiture Timeline 96

Appendix 3B Retention Planning Document 99

Appendix 3C Weekly Action Item Control 102

Appendix 3D Communication Plan Outline 104

Appendix 3E Issues and Resolution Control 106

CHAPTER 4 PREPARING FOR THE TRANSACTION 108

4.1 Introduction 109

4.2 Preparation Phase Process Steps 110

4.3 Engagement of External Resources 111

4.4 Validation of the Transaction Structure 120

4.5 Development of Selling Materials 122

4.6 Identifi cation of Potential Buyers 131

4.7 Preparation of a Data Room 134

4.8 Overview of the Phased Disclosure Process 136

Key Points 139

Appendix 4A Illustrative Data Room Information Listing 140

CHAPTER 5 DISENTANGLEMENT 143

5.1 Disentanglement: Preparing the Business to Be Separated 144

5.2 Disentanglement Process Steps 146

5.3 Gathering Information 149

5.4 Determining the Required End State 158

5.5 Developing the Disentanglement Plan 166

5.6 Quantifying the Disentanglement Costs 170

5.7 Executing the Disentanglement Plan 177

Key Points 180

CHAPTER 6 MANAGING THE SELLING PROCESS 182

6.1 Selling Process: Show Time 183

6.2 Selling Process Steps 185

6.3 Announcing the Intention to Sell 188

6.4 Marketing the Business 200

6.5 Due Diligence 210

6.6 Bidding and Negotiations 217

Key Points 220

CHAPTER 7 STRUCTURING THE TRANSACTION 222

7.1 Structuring the Divestiture Transaction 223

7.2 Structuring Process Steps 225

7.3 Bringing in the Required Expertise 227

7.4 Analyzing Alternative Transaction Structures 231

7.5 Drafting the Agreements 242

7.6 Negotiating the Agreements 257

7.7 Complying with Regulations 266

Key Points 270

CHAPTER 8 CLOSING 272

8.1 Closing, Transitioning, and Learning 272

8.2 Closing Process Steps 273

8.3 Closing the Transaction 274

8.4 Managing the Postclosing Transition 277

8.5 Conducting a Postdeal Process Assessment 280

8.6 Final Thoughts 282

Key Points 290

INDEX 293