Amid macroeconomic pressures, geopolitical tensions and technological disruptions, businesses are reassessing their models and strategies. Those with a clear vision for growth will be best positioned to thrive.
While acquisitions remain a popular route for expansion, a growing number of companies are turning to divestitures — shedding non-core assets to streamline operations. This strategy is emerging as a key driver for raising capital, sharpening business focus and unlocking shareholder value.
Recent analysis of global M&A trends by Baker Tilly International, in partnership with Mergermarket, reveals a notable rise in divestiture activity, particularly among businesses with operations in the US, the world’s largest M&A market. Carve-outs, where parent companies spin off business units to operate independently, are increasingly favoured by corporates aiming to boost agility and shareholder returns. This signals a shift towards leaner, more focused organisations.
This trend is set to reshape industries, potentially boosting M&A activity, promoting sector consolidation and innovation as companies aim to strengthen their market positions. For executives and dealmakers, understanding and capitalising on divestiture trends will be crucial to navigating the evolving M&A environment and seizing opportunities for long-term value creation.
The divestiture dividend
"Divestitures are emerging as a critical strategy across several sectors — especially in industries like technology, healthcare, and industrials, where agility and innovation are paramount," explains Xavier Mercadé, CEO of Baker Tilly in Spain.
"There’s a growing recognition that divestitures are more than just a way to offload non-core assets. They're a strategic tool for streamlining operations and boosting financial performance."
Nearly half (48%) of dealmakers surveyed are considering further divestitures or carve-outs, having completed at least one transaction in the past 12 to 24 months.
One of the strongest arguments for divestitures is the overwhelmingly positive outcomes they deliver, according to Harsh Maheshwari, Head of Corporate Finance at Baker Tilly International.
“Beyond the immediate operational and financial gains, divestitures provide companies with the financial flexibility to pursue new investments. In fact, 40% of respondents to our survey indicated that proceeds from recent divestitures were reinvested in acquiring other businesses. This allowed them to quickly pivot towards more promising market segments or emerging technologies.
“The strategic use of divestiture proceeds demonstrates that these transactions are not just about shedding assets or cutting costs. They're increasingly seen as a powerful tool for unlocking capital to fund transformative initiatives and drive long-term value creation."
The rise of carve-outs
A significant trend in divestitures is the growing popularity of carve-outs as an attractive option for companies seeking to unlock value from non-core assets while retaining some level of ownership or involvement.
This trend is especially prominent in the US, where carve-outs have become a preferred strategy.
“They offer flexibility and maximise value, helping organisations navigate regulatory and operational challenges”, explains Bill Chapman, Principal at Baker Tilly in the US.
“Carve-outs also offer advantages in terms of risk management, according to 57% of survey respondents. In today’s increasingly complex and uncertain business environment, carve-outs enable the parent company to isolate riskier or non-core businesses from its main operations, thereby protecting the broader organisation from potential downsides.”
ESG drives divestiture motivations
A growing focus on sustainability and environmental, social and governance (ESG) factors is also shaping divestiture strategies, notes Olivier Willems, CEO of Baker Tilly in Belgium.
"As the world transitions to more sustainable practices, investors, consumers, and regulators are demanding that companies meet stringent ESG goals. Increasingly, this pressure is driving divestiture decisions, with 45% of survey respondents citing ESG factors as motivators for recent asset sales."
Part of a bigger picture
Divestitures are rarely standalone decisions; they are often part of broader corporate restructuring efforts. According to 62% of respondents, their recent divestitures were integrated into comprehensive plans to reorganise and streamline operations.
This suggests that dealmakers are adopting a holistic approach to portfolio management, using divestitures as a tool to reshape their organisations for future growth and enhanced competitiveness. By aligning divestitures with larger restructuring initiatives, companies can drive more impactful transformations and bolster their market position.
However, divestitures are complex endeavours that require meticulous planning, execution, and communication.
"Maximising the value of divested assets is crucial."
"Transparent financial reporting, strategic marketing and investment in technology are key strategies for success.
“Clear financials reduce risk and attract higher bids, while showcasing growth potential through effective marketing enhances buyer interest. Additionally, by investing in technology, companies can highlight innovation, positioning the asset for future success and ultimately commanding a higher price."
Read the full report, which includes best practices and actionable steps to follow if you are considering or planning divestitures of your own.
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