United Kingdom

Separation 

Research from KPMG International shows that only 30 percent of deals deliver shareholder value.

 

We are able to work with clients at different stages of the transaction lifecycle aiming to help ensure deal objectives and value targets are  met in a timely manner, with minimal disruption to business as usual.


We are able to provide sell side support, focused on separation planning and implementation, as well as buy side separation support.

What's on your mind?

  • Divesting non-core assets in an effective way to deliver shareholder value with clear expectations on timing.
  • Ensuring deal value is enhanced through a structured separation process that aligns financial and operational assumptions.
  • Understanding exactly what is for sale and how it will be separated from the existing business with minimal disruption.
  • Identifying the key dependencies between the separated business and the seller’s organisation and how to address them to protect value either as a seller, or, as an acquirer where standalone operations will be required.
  • Understanding the potential impact on people; who goes, who stays and where skills and resource gaps may exist.
  • Defining and valuing the ongoing relationship between the sellers business and the target.

How we can help

  • We work with sellers to understand how they can potentially increase value by tailoring a divestment process to protect and possibly enhance the value of the asset.  
  • We do this by addressing pre-deal separation issues and opportunities for cost reduction and understanding how a bidder population could influence the approach to value.
  • We work with buyers or sellers to try and quickly identify and mitigate separation risks.
  • We help management to resolve key separation issues and drive their decisions based on materiality and impact.
  • When working with the seller, we are able to help them articulate how the business will be separated, typically in a Separation Blueprint which can be used as a transaction document and as the key reference for the business to work to separate the business.
  • We help sellers understand the potential cost impact of separation on the target business (both one-off and recurring) and help align this to the business plan assumptions.
  • We assist in preparing ongoing commercial agreements between the retained and the separated businesses and work with your legal advisors to align financial and operational aspects.
  • We can help management to develop practical implementation plans to achieve separation required for Day one and to be fully standalone.
  • For acquirers, we help them to understand and interpret the separation issues that may impact deal value.
  • We assist acquirers in developing transition plans that address gaps where the seller has not offered a solution or transitional arrangement.  These can be used to prepare for day one, engagement with the target management team and to inform Investment Committees on separation impact and mitigation.

 

Supporting achievement of deal value through:

 

  • Provision of an objective evaluation of separation issues and costs.
  • Our experience, our deal insights and our structured approach.
  • Provision of support across the transaction cycle from pre-deal to post-deal planning and implementation.
  • Focus on the “hard” and “soft” elements of transactions taking into consideration the financial elements as well as people and cultural issues.
  • Working collaboratively with clients so that the business retains ownership of the separation.



Why KPMG?

  • We have a record of helping clients deliver value from their deals.
  • Our team of transaction experts understand and have experience of assisting clients with the associated challenges, and can work collaboratively with you to achieve your goals.
  • We have collective experience of over 500 deals and have the sector expertise and global reach through other KPMG member firms to support your M&A activity across the world.

Case Study

  • A major European infrastructure manager was required to divest a significant asset.
  • The sale was triggered by a Competition Commission directive to sell the asset and required a quickly-initiated process.
  • Other value drivers included minimising the stranded costs as the business re-focused on the retained portfolio of assets.
  • Although it was considered a standalone asset, there was significant inter-dependence across the group.
  • Management needed to prepare the business for sale and articulate to bidders the proposed separation plan and cost impact.
  • As an operational asset, minimising disruption and impact on business as usual was key.


 

What We Did 

 

  • We helped the client to establish a separation programme and governance structure to immediately give control and accelerate the activities, with the transaction process already underway.
  • We quickly identified the separation “hotspots” and the material issues driving value as the business became standalone.
  • We helped management to prepare a Separation blueprint.  This involved:
  • Working with the client team to develop a service delivery model for each business function to explain how the business operated “as is”, how it would operate at deal close, and how it would operate on a fully standalone basis.
  • Helping the client team to develop the plan to map which people transferred, and where skills and resource gaps would need to be addressed.
  • Helping the client team to identify which activities would require post deal, transitional support from the seller. 
  • Helping the client team to align the proposed business operating model to a revised cost base, including estimates of one-off and recurring costs of separation and impact on EBITDA.
  • In conjunction with the appointed legal advisors, we provided input to the services schedules for the Transition Service Agreements. We also facilitated the process to get internal alignment and sign off by representatives of the retained and separated businesses.
  • We worked with other stakeholders to help the client to establish a detailed plan for pre-deal separation.
  • We helped the client team establish a programme to manage the ongoing activities to deal close.
 

Contact

 Steve Munce

Steve Munce        

Partner

KPMG in the UK

 

020 7311 8205

Email Steve

 

Mohammed SheikhMohammed Sheikh       

Partner, Financial Services

KPMG in the UK

 

020 7896 4992

Email Mohammed