Carve-out & divestment
Maximising value creation from your divestment programme
To meet the challenges posed by new technologies and changing business and service models, automotive decision-makers are increasingly looking at far-reaching reorientation or restructuring initiatives, such as carve-outs, whether for individual business areas or entire companies.
A targeted carve-out of a separable business unit or corporate entity is often seen as an opportunity for the entity in question to completely transform and reposition itself for long-term success. But it must be managed carefully and efficiently if these objectives are to be achieved.
A carve-out is the spin-off, split-off, or sale of a business unit, subsidiary, or business segment. What makes it different to a normal disposal or divestment is that the entity being ‘carved out’ is not independent, but is either fully or partially integrated prior to the restructuring.
The aim is twofold:
After this has been accomplished, the newly created entity (or ‘NewCo’) offers numerous strategic opportunities, from an IPO to a sale to other companies in the automotive industry or investors such as private equity firms.
For the parent organisation, the move provides interesting opportunities for development, especially through increased control, and new possibilities for investment or acquisition. The advantages may include additional opportunities for tax optimisation or cost reduction.
Carve-outs thus offer the NewCo further options for capitalisation and enable the parent entity to accelerate the strategic realignment of its core businesses.
Successfully managing the complex challenges of a carve-out, as well as defining a clear framework and basic guidelines for the transformation, require careful preparation, centred around three key stages:
Each of these areas presents significant complexities and considerations. If done well, a carve-out can be an attractive option for delivering long-term added value. But if not, any added value may be hard to come by, or at best, risks being very short term.
Over a series of short articles, Mazars experts will examine key steps to consider during the carve-out from a range of different strategic perspectives:
For more information on carve outs or to discuss how we can help your company, please get in touch with us below.
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