10
Specialist view
A CARVE-OUT TRANSACTION IS OFTEN ONE OF A NUMBER OF STRATEGIC ALTERNATIVES UNDER
CONSIDERATION
Almost two-thirds of participants indicated that they routinely consider the implementation of possible alternative strategic actions in the run-up to deciding whether
to proceed with a carve-out. Others reported examining this depending on the complexity of the potential transaction. Internal restructuring measures, (partial)
closures of operations, the formation of a joint venture or the transfer of business activities to management (MBO) are some of the alternatives frequently
considered
"The range of strategic
alternatives depends on how
attractive the carve-out
business is for strategic
buyers and (turnaround)
investors. Internal restructuring
measures may be a preferred
option for reasons of internal
control and subject matter
expertise but require expert
knowledge and dedicated
resources."
"Last-man standing
collaboration models between
suppliers in markets with
declining turnovers are less
frequently taken into
consideration. Identification of
a suitable partner, overcoming
diverging valuation
expectations and combining
different businesses in a joint
venture structure are
challenges that tend to reduce
economies of scale afforded
by platforms. On the other
hand, joint ventures come to
the fore in topics of the future,
e.g., digitization of business
models."
"Trustee solutions are typically
used in scenarios where
restructuring is being
undertaken for the benefit of
the company and its creditors,
e.g., financing banks. It
remains to be seen whether
more recent restructuring
models such as shareholdingas-a-service
will prove to be
suitable for transformation
projects or be limited to
special situations."
"Selling the carve-out business
to management (MBO) is a
viable option in case of a
profitable carve-out business.
MBOs appear obvious,
however, often they don't
come into play for reasons of
strict equity and debt financing
conditions in a tough financing
environment, currently.
"Cost-reduction programs,
sales improvement actions,
plant closure, relocation of
projects and production as well
as renegotiation of
disadvantageous commercial
agreements and contractual
relationships are some of the
alternative actions frequently
mentioned by participants."
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