Written By:
Anthony Escamilla
Chief Financial Officer, Protos Security
Anthony Escamilla has more than 35 years of experience leading finance and operational functions across multiple industries and working with private equity-backed companies through growth, acquisition and transformation.
Why Corporate Divestitures And Carve-Outs Are Accelerating
Capital discipline, execution risk and portfolio focus are driving the change. Here’s how to make sure you get it right.
Recently, corporate strategy has transitioned beyond its traditional focus on expansion to a focus on precision. Across industries, management teams have been re-examining their portfolio strategies and posing the tough question: What belongs at the core of our strategy, and what doesn’t?
The result is a dramatic rise in carve-outs. In fact, most carve-outs aren’t driven by strategic decks but by recognition that strategic focus is spread too thin across too many priorities. As a result, organizations are spinning out and divesting non-core businesses.
Carve-out transactions, as such, are not new. I can count many such transactions in nearly four decades of experience. The only thing that has changed is the pace and frequency. It makes sense, particularly as growth rates slow, capital gets more costly, technological advancements—digital and artificial intelligence—continue to accelerate and shareholders require immediate liquidity as much as superior investment returns.
For many firms, selling a business can become a quicker and riskier way to rethink and refocus strategy than seeking big mergers or transformations.
