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How to Create Value for a Business by Divesting | Must-read Wharton Faculty Authors | Emilie Feldman

August 08, 2023 / 00:29

This episode discusses the performance implications of divestitures compared to mergers and acquisitions, focusing on shareholder value and long-term outcomes.

The conversation highlights that divestitures can outperform mergers and acquisitions by two to three times in terms of shareholder value. This performance difference can persist for up to 36 months after the transactions are completed.

Key points include the reasons why companies often overlook divestitures despite their potential for creating more value than mergers and acquisitions.

TLDR

Divestitures outperform mergers in shareholder value, lasting up to 36 months.

Episode

0:29
00:00:00
if you look at the performance implications of divestitures versus mergers and Acquisitions we actually see
00:00:05
that the divestitures outperform the M A's by two to three times in terms of
00:00:09
their shareholder value and that difference persists for up to 36 months after the completion of these
00:00:14
transactions so that's the pathology right we don't do these transactions
00:00:19
even though they actually create more value for companies than the transactions that we are actually
00:00:24
focusing on

Episode Highlights

  • Divestitures vs Mergers
    Divestitures significantly outperform mergers in shareholder value, creating more value for companies.
    “Divestitures outperform mergers by two to three times!”
    @ 00m 07s
    August 08, 2023

Episode Quotes

  • Divestitures outperform mergers by two to three times!
    How to Create Value for a Business by Divesting | Must-read Wharton Faculty Authors | Emilie Feldman
  • This difference persists for up to 36 months after completion.
    How to Create Value for a Business by Divesting | Must-read Wharton Faculty Authors | Emilie Feldman

Key Moments

  • Value Creation00:07
  • Long-term Impact00:11