As companies expand, it's common to focus on acquiring new assets to fuel further growth. However, a strategy that often goes overlooked is divestment—selling off parts of your business. While it might seem counterintuitive, strategic divestment can be as impactful as acquisitions when it comes to achieving long-term growth and stability.

At a time when many businesses are struggling to raise funds and may be considering streamlining or refocusing their operations in order to improve efficiency and capitalise on a potential economic recovery, divestments of non-core parts of a business can be a powerful strategy.

Why divestment matters
There are several reasons why a company might consider divesting a division. It could be to improve the balance sheet during challenging economic times, refocus on core business areas, or streamline operations by shedding underperforming segments. Divestments can generate liquidity, allowing a business to reinvest in its most promising ventures or reduce debt.

Beyond these immediate benefits, divestment can also be part of a broader growth strategy. By acquiring units with the intention of enhancing their value and later selling them at a profit, businesses can optimise their portfolios and concentrate on what they do best. This approach not only supports financial stability but also fosters agility, allowing companies to adapt swiftly to changing market conditions.

Planning for post-divestment success
One of the most crucial steps in divesting a part of your business is to plan meticulously for the post-divestment phase. It's vital to understand the full impact of the sale on your remaining operations. Conduct a comprehensive review of the division you're considering selling, including its interactions with other units, its sales performance, customer and client base, and its overall role within the organisation.

This evaluation will help you determine whether the divestment is strategically sound and, if so, how to mitigate any potential disruptions. The goal is to ensure that, after the sale, your business remains robust and focused on its core objectives, without any unexpected setbacks.

Making the financial case
To attract the best possible buyers and achieve a favourable sale price, you need to present a compelling financial case for the division you're selling. This means preparing detailed financial statements for the unit, ideally covering at least the past three years. If the unit has not been accounted for separately from the wider business, now is the time to create a distinct financial profile for it.

In addition to historical financials, provide projections that highlight the unit's potential under new ownership. Use your insider knowledge to develop realistic forecasts, showing how a buyer could unlock further value from the division. This could include insights into operational improvements, market opportunities, or cost-saving measures that a new owner might implement.

Dedicating resources to the process
Divesting a business unit is a complex process that requires significant focus and resources. It’s not something that can be managed effectively on a part-time basis or as an afterthought. Setting up a dedicated team to handle the divestment can make a significant difference in the outcome.

If staffing constraints make it difficult to establish a standalone team, assign a group of key employees whose primary responsibility during this period is the divestment. This team should be empowered to handle all aspects of the sale, from planning and financial analysis to marketing the division and negotiating with potential buyers.

Just as you would for an acquisition, a concentrated and well-resourced approach to divestment is essential. This will ensure that every stage of the process receives the attention it deserves, leading to a smoother transaction and better overall results.

The path to long-term growth
Incorporating divestment into your business strategy doesn’t mean scaling back; it’s about being strategic with your resources. By thoughtfully managing which assets to hold onto and which to let go, you can position your company for sustainable growth and greater profitability. Divestment, when executed correctly, can be a powerful tool to enhance your company's resilience, focus, and market position.


Ultimately, whether you’re looking to streamline operations, boost liquidity, or refocus on core competencies, divestment offers a pathway to achieving your long-term business objectives. When integrated into a well-planned growth strategy, divestment can help you build a more agile, efficient, and profitable organisation.