According to the study, geopolitical uncertainty is often cited as a major divestment factor in EMEA (59%), compared with only 30% in the Americas and 22% in Asia-Pacific. Of those companies in EMEA that divested for geopolitical reasons, 81% say the core reason was regional political instability, with 74% saying it was because of Brexit specifically. By contrast, in the Americas and Asia-Pacific, regulatory change is by far the most frequently cited reason for divestment (84% and 86%, respectively).
“On an international level, we notice many cases of divestment based on last-minute decisions, sacrificing the maximum value most of the times. The impact of speed over the sale price is significant and should motivate companies to make strategic, prudent decisions that would prioritize the value. In the case of transactions in Romania, the level of unpredictability generated by macroeconomic and political factors is impacting both the calendar of transactions and the evaluation for sellers. Many times, legislative changes generate additional costs for business which cannot be subdued, especially if they occur during transactions,” says Liliana Busoiu, Executive Director Transaction Diligence at EY Romania.
The EY Global Corporate Divestment Study focuses on how companies should approach portfolio strategy, improve divestment execution and future-proof their remaining business amid massive market disruptions. The 2017 study results are based on more than 900 interviews with corporate executives between October and December 2016.