The information uncovered during this step may prompt you to revisit a previous step. For instance, one of the oil and gas company’s tests had to do with the amount of time it would take for a buyer to bring the financial systems of the divested gas stations, including the credit card system, into full operation. It was clear that this couldn’t be implemented on the day the deal went through. So the seller returned to Step 2 to understand the impact of a delay. Some iteration of this sort is to be expected as new information and possibilities emerge.
Step 4: Transition Planning
Having identified the gaps and decided how to fill them, you as the seller now must start carving out the asset and making sure it has the capabilities it will need. This involves the creation of detailed project plans—perhaps one for each of the major capabilities involved—and of work teams.
Where to begin? At this stage, there is still no guarantee of who the buyer will be. Focus on activities that need to be conducted for any buyer. This forces you to tend to the known things first, as opposed to doing what comes more naturally and tending to the biggest things first. This approach can speed a sale once a buyer has been identified—and even if you don’t sell the asset, in the end, you won’t regret the planning effort.
The oil and gas company knew it wanted to cordon off parts of its pricing capability, no matter who bought the refinery. Identifying and stripping out its proprietary algorithms was one of the “no regrets” projects it embarked on. By contrast, another technology issue—how to turn over customer data for its divested retail business—though clearly a major undertaking, wasn’t knowable. The company identified several ways to do this, but didn’t start working on any of them, because it recognized that the buyer might have its own ideas about how to handle this.
Step 5: Buyer Engagement
Once you have a definite buyer and a signed contract, you can flip the switch on all the plans you have been making in Steps 1 through 4. Begin by sharing your thinking with the buyer, including which capabilities you see as most important and what your plans are for transferring them. Describe how you will deliver a fully functioning business to the buyer. The buyer has its own market strategy, quite possibly different from yours, and may have a different view of which capabilities are important. These differences sometimes lead the buyer to ask for something you don’t expect. That’s another reason not to start on this stage prematurely: That early work might have to be discarded.
In the oil and gas company divestiture, the operation of the gas stations was a major issue. These assets couldn’t simply be handed over, with the seller washing its hands of them—the buyer wouldn’t have had the personnel or the knowledge to operate the assets successfully. Although the parties initially discussed a commercial services agreement, in which the seller would have operated the retail assets for the buyer indefinitely, they ultimately settled on a technical service agreement, which had the advantage, in both parties’ eyes, of spelling out a clear end date. The seller began laying the groundwork to fulfill that agreement.
Preparation, Skills, and Pride
Divestitures can be some of your company’s most complex transactions. They require strategic thinking, a massive amount of contingency planning, and—once a certain point is reached—the simultaneous management of multiple work streams and projects. You will need to be flexible and ready for the unexpected. This checklist can help you get ready for the process: