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How do we answer the final "difficult question" of selling the division?

Division Incos Pens
New answer on Dec 29, 2021
3 Answers
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Anonymous A asked on Dec 29, 2021

Assume that we can't save the division and the company wants to sell it to another player, how would you ensure our client receives the highest possible price?

Really stuck on this omg

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Hagen
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replied on Dec 29, 2021
#1 Bain coach | >95% success rate | interviewer for 8+ years | mentor and coach for 7+ years

Hi there,

This is indeed an interesting question which is probably relevant for quite a lot of users, so I am happy to provide my perspective on it:

  • Generally speaking, I would advise you to think about the three dimension “value”, “people” and “process”, both as a structural anchor as well as for the content:
    • Value: Obviously, the client should try to maximize the value of the divison by increasing the key underlying metric (normally some profitability or cashflow figure). For obvious reason, he should have a look at 1) commercial excellence, 2) cost reduction and 3) capital efficiency.
    • People: The client should think about 1) having the best people engaged with the sale of the division while 2) making sure to keep the high performers of the divison attached to the company.
    • Process: Obviously, the client needs to define and choreograph the sales process, e.g. by defining what potential buyers to offer the sale.

In case you want a more detailed discussion on how to best answer complex questions with several dimensions, please feel free to contact me directly.

I hope this helps,

Hagen

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Ian
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replied on Dec 29, 2021
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

I suppose that's why it's labelled a “difficult question” :P

There are a range of things you can do from hiring a top-tier company to manage the sale (i.e. JP Morgan/Goldman), to boosting performance in the year of sale to make #s look better (i.e. cutting costs) to auctioning the division across multiple markets to encourage higher bidding. This is just to name a few!

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Pedro
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replied on Dec 29, 2021
Bain | Roland Berger | EY-Parthenon | Mentoring Approach | 30% off first 10 sessions in May| Market Sizing | DARDEN MBA

You need to optimize the value of the division as is (performance optimization), and to find strategic buyers - people who would pay above it's pure financial worth because they want it for strategic / synergy reasons.

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Hagen gave the best answer

Hagen

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