Friday, October 23, 2009

Divestitures to Rule Deal Market, PwC Reports




Finance executives believe that corporations will over the next 12 months begin spinning off or selling businesses with increasing frequency. That was one of the findings of a survey title "Divestitures in Difficult Times" from PricewaterhouseCoopers Transactions Services. 

Sixty-nine percent of the 215 private and public company executives surveyed in August and September anticipate similar or increased levels of divesture activity in the coming year as compared to the pervious 12 months. The trend will be driven by corporates looking to streamline their businesses by selling non-core assets. 

Strategics will also lead activity on the buy side, according to PwC, as companies pursue targets "in order to strengthen their positions by filling a gap in their business models," said PwC partner Bryan McLaughlin. 

The survey also confirmed what we've been hearing for sometime: That due diligence is taking longer. Seventy-two percent said the divestiture process has taken longer to complete in recent months, as buyers dig deeper to uncover potential liabilities and mitigate risk. "In this type of environment, you also have buyers who are suspicious that a divestiture may just be a simple way for companies to rid themselves of a problematic asset, which adds additional pressure on the process," said PwC partner Mark Ross. 

Divesting will be driven in part by pent up demand. Thirty-five percent of respondents said they had delayed or deferred a sale this year because of difficult economic conditions. As markets and the broader economy stabilize, those sellers may move forward with those deals.  - Suzanne Stevens, The Deal.com




Generation Equity Advisors, LLC
Technology and Media Investment Banking

Aaron Solganick
Managing Director and President
8391 Beverly Blvd, Ste 480
Los Angeles, CA 90266
(310) 465-8940 direct
asolganick@generationequityadvisors.com