Following a busy fourth quarter in 2012, the M&A market slowed sharply in the first quarter of this year, yielding the slowest six-month period for combining companies in four years, according to Thomson Reuters data cited in the New York Times.
But don’t expect the doldrums to last. Evidence both anecdotal and empirical suggests a robust deal market in the second half of 2013. That means companies contemplating carve-outs should get ready now to sell under performing or non-core assets. Here are five steps to get the best value for an operation under consideration for sale.
Think Like a Buyer
Sellers must ask themselves what they would like to know if they were considering purchasing a given business unit, and then compile that information for negotiations. The seller also must correctly assess what the strategic value of the business unit is in the eyes of different sets of buyers and how to best position the asset, according to Braun Jones, managing director of Outcome Capital, LLC. In addition, Drew Drake, director of corporate development and assistant treasurer at SRA International, says identifying the price hurdle upfront and validating those data points against the market is important before devoting significant resources to a divestiture.