As companies consider their ability to thrive in a downturn and beyond, divestment should be an important lever for consideration. However, divestitures are often not in the first-aid kit of many CEOs. They are generally reluctant to divest businesses in a down market, assuming the assets will not fetch a strong price due to the broader economic conditions. That may be a mistake.
In this new KPMG report, Divesting in a downturn: Staying committed to a long-term strategy has its rewards, we argue that economic stress can serve as a useful catalyst to divest, shining a bright light on underperforming businesses for which you may not be the best owner. Prudent management teams know that they need to continually identify the biggest contributors to higher valuation, driving growth and pursuing strategic alternatives for those that hold the business back—even in a downturn.