Divestitures: Creating Value Through Strategy, Structure, and Implementation

CHAPTER 3

Reconfiguring the Corporate Portfolio

INTRODUCTION

On the face of it, divestitures and acquisitions might seem to be at odds with each other: divestitures are used to reduce corporate scope, while acquisitions are used to increase it. But divestitures and acquisitions can be quite complementary, enabling companies to achieve greater efficiency in their existing operations, to explore new opportunities in different strategic domains, or both. In fact, companies regularly use the two types of transactions sequentially to reconfigure their portfolios: 91% of frequent acquirers (defined as companies that made at least ten acquisitions between 2007 and 2017) also divested an average of 11 times during this period, as compared to 67% of ...