CFO Strategies in the Era of Increasing Distressed Carve-Out Transactions –
As companies increasingly seek to streamline their portfolios and divest underperforming assets, distressed carve-outs have become a major M&A trend.
Curt-Oliver Luchtenberg, Partner at Eight Advisory Strategy & Operations and expert in carve-outs and post-merger integration, expects a 20% increase in carve-outs in Europe next year. Disposals will account for 25% of global M&A deals in 2022, a significant increase from just 2-4% in 2020. Luchtenberg mentions that carve-out decisions are often driven by rising production and financing costs, especially for non-core, non-strategic businesses. He cites examples from the automotive sector and the basic chemicals industry.
The search for buyers is difficult, as strategists are cautious when it comes to loss-making units. Luchtenberg advises sellers to present the turnaround potential transparently through concrete action plans and investments. The retention of shares, the offer of purchase commitments and the joint pursuit of supplier conditions can increase the attractiveness of deals.
The expert favours “smart” spin-offs that redefine relationships rather than cutting them, such as transforming the parent company into a service provider. Transparent communication and retaining talent through guarantees are crucial for distressed sellers.
Discover the complete guide to successful distressed carve-outs – read the full article now.
The original article was written by Lena Scherer and published in Finance Magazine on 10th May 2024
