Divestments on the back burner for many in 2016 & 2017

Divestments on the back burner for many in 2016 & 2017

While M&A activity remains robust, divestments have not been in focus at many multi-national businesses and this looks set to continue over the years ahead.

It may come as a surprise that companies are less likely to see asset sales as an integral part of their M&A strategy over the next two years, according to Herbert Smith Freehills’ new cross-border M&A survey Beyond Borders. Almost half (46%) of respondents have no intention of making any divestments at all.

With this in mind, and given the high volume of respondents who are intending to make acquisitions, this could mean a shortage of top-quality opportunities and continued high valuations for the best assets.

However, in line with the growth in cross-border acquisitions, among those companies that are planning to sell off assets, well over half (60%) expect to be making disposals in overseas markets.

Among those businesses that are considering divesting, the most common reason, cited by 53% of respondents, is a desire to offload under-performing businesses. More than a third (36%) of businesses are planning to consolidate in order to focus on their core business, while almost as many (35%) want to make divestments in order to reduce debt.

Contact our experts

Stephen Wilkinson
Global Head of M&A
Tel: +44 20 7466 2038
Email: stephen.wilkinson@hsf.com

Roddy Martin
M&A Partner (UK/US)
Tel: +44 20 7466 2255
Email: roddy.martin@hsf.com

Nicola Yeomans
M&A Partner (Asia)
Tel: +65 68688007
Email: nicola.yeomans@hsf.com

Andrew Rich
M&A Partner (Australia)
Tel: +61 2 9225 5707
Email: andrew.rich@hsf.com

Frédéric Bouvet
M&A Partner (EMEA)
Tel: +33 1 53 57 70 76
Email: frederic.bouvet@hsf.com

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After a record-breaking year for M&A last year, the start of 2016 has been more uncertain with the slowdown in the Chinese economy, depressed commodity prices and falling stock markets coupled with Eurozone instability all causing uncertainty in the global economy. However, despite these uncertainties, our two separate surveys, conducted in late 2015 and updated in 2016, demonstrate that the short to medium-term outlook for M&A as a priority focus for capital allocation by corporates remains extremely robust.

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