What are the benefits of company divestiture for businesses?

Mergers and acquisitions are given a lot of importance for growth of business organizations. It plays a vital role in the corporate strategy and maintenance of the business portfolio. However, when a company diversifies into various businesses and its corporate portfolio becomes huge, it becomes difficult to maximize returns on capital. Also, it gets difficult to take advantage of new opportunities for growth.
Company divestiture plays a vital role in restructuring of the organization’s corporate portfolio and maximizing growth. Compared to M&A, companies don’t give much importance to divestitures. They fail to realize that if this activity is carried out perfectly, it can provide huge benefits in terms of future growth, shareholder value and cash flow.
Why divestiture is done?
There are various reasons why a business owner might want to divest a business. From restructuring the business portfolio to short-term cash generation, irrespective of the reason, the main aim of divestiture is to get the best return.
Organizations should do divestiture in an accelerated time frame in order to get optimum return from it. It is important to ensure that the to-be-divested units are configured in such a manner that it gives out maximum appeal to potential buyers.
In order to develop divestiture strategy, companies need to assess their corporate portfolio comprehensively. They need to identify opportunities for value creation. From aligning assets with the best opportunities for businesses to development of a sequencing strategy for divestiture transaction, this process entails various steps.
There are several companies that offers services related to mergers and acquisitions in India. It is recommended to do some research and find a reliable option. You can either ask for references or shortlist two three companies on your own. Compare their charges and portfolio to make a final choice.

Why are business valuation services required?

There are various purposes for which business valuation is required. From the sale or purchase of a business to settling legal issues related to a business, there are various reasons why you would need this service. But before we delve into the importance of business valuation, let us first understand what it means.
Business valuation is basically the process of determining the estimated value a business has in the market. It acts as a valuable tool for business owners, investors as well as stock owners. Used for buying/selling agreements, estate planning, mergers and acquisitions, pension plans and even bankruptcies, business valuation services hold a lot of important for businesses.
Why is it important?
It is the heart of a buy-sell agreement that is instituted between business owners. If you are a business owner preparing for a sale or in a legal situation that needs detailed valuation, this service will be of great importance.
It is also conducted when shares are bought or sold to employees, gifts are planned to heirs, adequate key man insurance coverage is provided or a base needs to be created for compensating key non-family management. Business owners also use this method for conducting valuation for tax purposes or transfer of ownership. It is also required for insurance and financing purposes. 
There are several factors that need to be considered when conducting business valuation. From earnings of the business and availability of assets to history of the enterprise from inception and other intangible values, various factors need to be taken into consideration.
If you are planning to seek services such as business valuation, M&A advisory or private equity advisory, make sure you are choosing professionals to work on the same. Only a team of valuation or advisory experts can deliver you desired results.

Tips to Consider in Business Acquisition

If you are planning to acquire a business, here are few tips that can help you in the process:
•    Make sure you are doing your research and due diligence before you go ahead with business acquisition. For instance, if you are buying a business, you need to research about the business and check all the details, including the letter of intent, confidentiality agreement, leases and contracts, tax returns, financial statements and other important documents.
•    Don’t hesitate in getting professional help. You should hire an attorney to look into the legal documents and legal matters and an accountant to look into the accounts of that business. You will also need an investment banker, valuation expert and representatives from sales, marketing and finance in the team for help.
•    Whether you are acquiring the talent or keeping the business intact, it is very important to respect what the team has built in terms of customer relationships and products. Don’t lose the respect or upset the customers.
•    Don’t forget to secure the digital rights of the business you are acquiring. From the email IDs and passwords to the web domains and social media accounts, everything needs to be with you. The email accounts from customers, stakeholders and vendors should also be with you so that you can inform them about the acquisition.
•    If you want to acquire a business but don’t have cash at the moment, you need to seek alternatives to cash. Try looking for funding in different places. You can use the seller’s assets, use an ESOP (Employee Stock Ownership Plan) or buy co-op.
Business acquisition has become a standard approach to business diversification. It needs to be done in the right manner and therefore, it becomes important to find professionals who can help you with it.