The Harvard Business Review just published an article written by Michael C. Mankins, David Harding, and Rolf-Magnus Weddigen at Bain & Company titled “How the Best Divest”. The team at Bain analyzed over 7,000 divestitures and found companies regularly pruning non-core assets, “the best divestors”, delivered a much higher return to shareholders than “average” companies. The piece uses industrial congolmerate Textron (41 divestitures since 2001) and forest products company Weyerhauser as two recent successful examples. The article then goes into what makes a good divestor, such as knowing when to unload, picking teams to handle engagements, process of separation, etc.

While the article was more or less directed at company CEOs and the sell side, an interesting follow-up would be to analyze the buy-side and breakdown the 7,000 transactions in terms of sales to strategics versus financials/private equity.

This entry was posted on Friday, October 3rd, 2008 at 5:14 pm and is filed under Private Equity News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.