Divestiture of Assets Greater
than the Whole
FidVentures' client, a global medical device company ("Company"), was considering whether to invest, sell the entire company, or sell its assets to maximize its value. The executives and the board approved the decision based on FidVentures' recommendation to divide the company into separate core assets, which, upon divestiture, resulted in an increased overall return on investment.
Situation
The Company initially aimed to better understand how to improve sales and profits using its core assets and the required investments needed to speed up growth. However, following a previous study by FidVentures, it opted to sell, which seemed more achievable and substantial to maximize shareholder value. The question was whether to sell the whole company or separate assets.
Our Approach
FidVentures' approach involves first analyzing the current situation in a fact-based manner. Next, they create what-if business models, analyze current businesses and key value drivers, and distill the information into a recommendation for company executives and the Board for approval. This includes developing transaction objectives with executive management, focusing on a clear vision, strategy, key investment considerations, initiatives, and a narrative for the transaction. This also involves acting on behalf of the company in a new business development role to reduce distractions to executives and add missing core competencies.
Our Recommendations
After analyzing each core asset's market potential, discussing it with potential suitors, and creating risk-based investment scenarios, FidVentures recommended that the company sell its core assets to maximize its value for the shareholders compared to selling the whole company.