"Creating Value through Manufacturing Excellence"
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Enhance Divestiture Value

Improving Financial Performance Prior to Sale

Project Description

Situation

A multinational company decided to divest six non-core businesses from its portfolio, comprising >$1.1B of revenue and >6,000 employees across >50 locations worldwide.

In order to enhance the value to be achieved in these divestitures, the company needed to improve the performance of the businesses during the sale process, while controlling for compliance risks.

Approach

(1) Aggressively rationalize operating capacity (people and locations) to adjust to the market downturn three of the businesses were experiencing.

(2) Aggressively reduce capital expenditures and working capital to generate cash flow improvements for the businesses.

(3) Reorient financial measures and executive incentives to focus on buyer valuation, especially EBITDA and cash flow rather than NOPLAT and ROC.

(4) Implement a compliance review program across all key global locations.

Results

(1) Realized $79M of productivity improvements across the businesses in one year, leading to $67M of EBITDA improvement.

(2) Increased operating cash flow >$70M, reduced working capital by $9M.

(3) Sold four businesses within 16 months, the company elected to retain two.

(4) Preserved the value of the sales by precluding compliance incidents.

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