Corporate Divestiture Update

Corporate Divestiture Update

Key Highlights

Cash and investments held by US corporations rose 30% to $2.5T in the first half of 2020

34% of divestitures had a Private Equity buyer in 2020

9.7% annual shareholder return for companies with focused divestitures and M&A programs

Companies with active M&A programs continue to outperform inactive companies

Corporate Divestitures Remain a Robust Part of the M&A Market; Trending Back up Post the Pandemic

Organizations tend to review their portfolios and go through corporate divestitures more aggressively post economic crises, as evidenced by strong divestiture activity post the financial crisis during 2008-2009. Given a heightened sense of risk and a desire to focus on growing core parts of their organizations, corporations are already evaluating noncore assets in order to free up cash to pay down debt, leading to uptick in the corporate divestiture activity in Q4 2020 and Q1 2021. 

A heightened sense of risk has caused corporations to evaluate noncore assets in order to free up cash to pay down debt

Companies With Active M&A Programs Outperform Inactives

Based on total shareholder returns generated over comparable periods, companies with focused divestitures and M&A programs tend to outperform organizations that have stayed relatively inactive.

Growing role of Private Equity Players as Buyers

Private Equity firms will continue to play a substantial role in divestitures as they accounted for a record 34% of buyers in 2020. The number of private equity firms focused on carve outs and “complex” deals continues to rise.

Perils Of Holding On To Non-Core Assets For Too Long

In Summary

With Private Equity continuing to be a driving force we anticipate the market for corporate divestment activity to remain buoyant. Equally as we are still in the process of emerging from the pandemic companies will continue to need to assess how they service debt requirements. M&A should be an important part of the discussion around board tables.

Power of 5: The Digital Transformation Series

“Power of 5”
The Digital Transformation Series

5 Leaders, 5 Questions, 5 Minutes

The Digital Transformation Series

Introducing our Power of 5 series. We ask 5 industry leaders 5 questions in 5 minutes to gain insight on how they are succeeding in today’s market.

In this series we focus on Digital Transformation. The rate of technological change is high and constant and global brands are increasingly looking to third party experts to help them keep up. From technology consulting to strategic marketing services, the market continues to grow and continues to focus on all things digital.

Over 5 weeks we interviewed 5 select leaders from global agencies who all serve international brands. Topics of discussion included, current challenges facing clients, learnings from 2020, and M&A criteria going forward.

Key Takeaways

  • 2020 has accelerated digital transformation across all areas of marketing spend and working practices
  • Measurability: performance marketing is increasingly important given the race to digital in all facets of the marketing mix
  • First party data is becoming central to marketing strategies particularly in light of the death of the 3rd party cookie
  • Ecommerce has gone from important to critically important for clients
  • Technology and brand need to be aligned more so now than ever before
  • Cultural fit and strategic alignment remains a key factor for M&A decision making across the board


Dan Gilbert, Global CEO, Brainlabs
Rob Pierre,
Co-Founder & CEO, Jellyfish
Zach Morrison,
CEO, Tinuiti
Wendy Clark, Global CEO, Dentsu International
David Jones, Founder & CEO, You & Mr Jones

Full Interviews Below

Dan Gilbert speaks with Jonathan Davis
Wendy Clark speaks with Marcus Anselm
Zach Morrison speaks with Jonathan Davis
Rob Pierre speaks with Marcus Anselm
David Jones speaks with Marcus Anselm

In today’s era of volatility, there is no other way but to re-invent. The only sustainable advantage you can have over others is agility, that’s it. Because nothing else is sustainable, everything else you create, somebody else will replicate.

Jeff Bezos, Executive Chairman, Amazon