Originally Published MX January/February
2002

TOPSPIN

Managing a Business
Divestiture

When selling
a business unit, company leaders must be prepared to address the concerns of
all stakeholders at once—beginning with those of employees.

Paul Touhey

The decision to
sell a business, the assets or a division of a business, or a wholly owned subsidiary
company, is never one that corporate executives make trivially or take lightly.
Companies divest and sell assets for various reasons dictated by market realities,
including the need to raise cash or to focus on opportunities for a higher return
on investment, or the understanding that an asset might perform better under
different ownership.

Paul Touhey is senior vice president at Fujirebio Diagnostics Inc. (Malvern, PA) and chairman of the Medical Device Manufacturers Association (Washington, DC), an industry trade association.

Businesses are often divested when corporate leaders determine that they no
longer fit with the future vision of the enterprise or, in the case of an acquired
business, that the initial acquisition was a mistake. Many times the decision
to divest comes as the result of a normal process of screening a product-line
or business portfolio, evaluating the original reasons for entering that business,