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A Divestiture Done Right

What makes a divestiture successful? The answer depends on many factors, such as the parent company’s current situation, the state of the market, and industry pressures. But by looking at companies that have experienced good results with their divestitures, it’s easy to spot common strategies that make a real difference in the outcome of the deal.

After the recession, the Merckles, a family of German pharmaceutical entrepreneurs, wanted to reorganize their corporate portfolio. They decided to sell Ratiopharm, the group’s generic drug business. Divesting wasn’t going to be easy—German health care insurers were putting pressure on industry margins—but in the end, the carve-out was a big success. Here are some key lessons to be learned from this example.

Control emotions

Understand the asset’s value

Maintain a strategic edge

Tackle it as a team

Seek expert advice

M&A and Divestitures
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