Emerging Markets

In today’s emerging markets, companies which are managing their business portfolios through acquisitions and divestitures create substantially more shareholder value than those that passively hold their businesses. McKinsey & Company’s research also proves that acquisitions are more common than divestitures. Most large divestitures take place when there is a loss so divestitures are reactive rather pro-active. Holding onto a business creates costs to the entire corporation, but also to the unit itself. There are several steps corporations have to do in these situations and these are: (1) Prepare the organization; (2) Identify candidates; (3) Structure the deal; (4) Communicate the decision; and (5) Create new businesses. By following these steps, “companies are more apt to get a proactive divesture program off the ground, build support for it throughout the ranks, and ultimately make it a core element of their corporate strategies”(Dranikoff). This core element is what core com...