The global meltdown and the ensuing turbulence have put a premium on focus and efficiency. Businesses have to find new ways to optimize their business portfolio, focus on their best and divest the rest. Creating value through strategic divestments calls for a disciplined and planned approach. Corporate strategists who are used to spending a lot of time and energy on acquisitions should also devote time and attention to divestment management—they should learn to strategically link destruction/divestments with creation/acquisitions.

The who's who of India Inc. are in the news - a few years before for their aggressive growth plans and now post the global meltdown for their divestment agenda. Various triggers accentuated by the recent turbulence in the global economy have forced leading Indian conglomerates to embark on this sell-off spree - some of the important triggers being large scale M&A acquisitions at peak prices (e.g., Tata Corus deal), high-leveraged buyouts during boom times, creating an inevitable debt trap/high cost debt burden, (e.g., Hindalco, DLF's acquisitions), falling demand/slow market revival, creating strain on cash flow for debt servicing and finally promoters (who borrowed for acquisitions against their pledged shares) forced to sell off to in order to raise funds to redeem their pledged shares and retain control of their business. (Refer Box 1)

Business strategy has two sides to be addressed - managing acquisitions and investments and managing divestments and sell-offs. The first part has been adequately addressed by the corporates, but the real challenge for companies in India and worldwide is to address the second part and prepare for the divestment game - ensuring that strategic divestments create value.

Global CEO Magazine, Divestment Management, Global Meltdown, Strategic Divestments, Global Economic Situation, Global Economy, Proactive Divestments, Deflect Management, Corporate Development, Economic Climate, Divestment Decision, Transition Management, Decision Making.