The continuing effects of the covid-19 pandemic are providing an impetus to companies to focus on divesting non-core assets with 74% of the companies surveyed by the EY India Corporate Divestment Study saying that they plan to divest in the next 24 months.

According to the study, companies acknowledged the importance of divestments as it allows them to focus on long-term value opportunities in the core business. “In line with this agenda, majority of the companies (80%) are using the divestment proceeds to invest in technology to support their core operations. In addition, CEOs are also looking to prioritize operational performance, while developing the divestment strategy.”

Nearly 60% of the surveyed CEOs acknowledged that they consider the potential for long-term value creation as an important criterion to identify the divestment candidate, the study showed. After effectuating a divestment, 53% of CFOs agreed that divesting assets allowed them to streamline their operations and pay attention to higher growth opportunities across the core business, it added.

“Divestments can not only help companies have a clear focus on core business, but it can also provide much-required impetus to build resilience during the current crisis. Companies need to place particular emphasis on structured portfolio reviews and a comprehensive divestment strategy to drive maximum value,” said Naveen Tiwari, partner and head, carve-out and separations, strategy & transactions, EY India.

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