For many companies, divestitures can pose some internal strife, as leadership can be hesitant to devote the capital and resources necessary for what they believe is a “daunting” process. Executives often wrongly associate divestitures with bankruptcy, a restructuring or debt reduction – which they feel portrays organizationalweakness or a sign of failure.Due to this stigma, many organizations improperly approach the divestiture process, minimizing or relinquishing the many critical benefits of realigning the company with it. But with the right guidance and support, organizations can overcome many of the common challenges that pop up during the process.
The Due Diligence Process
Companies will often undergo a divestiture when:
Their resources become stretched too thin across departments, due to unprecedented growth
The company files for bankruptcy and must reduce its total organizational assets
Executives vote to restructure their organization to align with their business strategy
The Company is looking to reduce inherent debt
When a company makes the decision to divest, they must first obtain permission from the Federal Trade Commission to begin the process. Once permission is obtained, company leadership/executives need to then implement several due diligence processes in the finance, human resources, treasury, and operations departments, among others.
One of the most important facets of the due diligence process is ensuring the security of a company’s data, technologies, and liabilities. To do so, organizations will typically conduct an extensive audit of their IT assets and liabilities so they can liquidate or sell them during the divestiture process. This can take as little as 60 days for smaller and less complex companies, to upwards of 3 or 4 years for companies with a larger footprint.
After evaluating the scope of their assets and liabilities, organizations will enter the process of recertifying, and relicensing these assets and liabilities prior to the transfer.
Common Challenges During a Divestiture
It’s no secret companies often struggle at different points in the auditing process. What’s more, companies tend to experience several challenges when digging deep into IT asset and liability management, including licensing issues, productivity obstacles or day-to-day business disruption when a company’s focus isn’t uniform. Below are some of the key obstacles that hamper a company’s success, including:
Customer Data Segmentation
Company Data Lake/Warehouse Segmentation
Application Hosting Services
IT Support Services
Adding a combination of even a few of these hardships to a company’s plate can have both leadership and the workforce gasping for air. For many companies, there just aren’t enough individuals ready to be assigned that can handle each phase of the process while concurrently solving issues uncovered during the audit. Then there’s the question of whether the organization’s team has the necessary experience or qualifications to solve concurrent issues, forcing the company to source the talent needed to properly continue the process.
How to Mitigate Divestiture Challenges
Creating and compartmentalizing an outsourced team of experts to handle issues that pop up is step one in streamlining the due diligence process.
Step two: Partner with an organization that can easily and rapidly find you those experts, while supporting the process holistically.
Instead of having to devote resources to find, train and onboard the talent needed, outsourcing to a proven partner empowers productivity — allowing a company’s internal team to focus on the day-to-day functions that keep the business running smoothly, without fear of burnout and consequential errors that come with a lack of experience. A proven partner will source, vet, and assign teams of qualified talent to meet process benchmarks while recommending or implementing strategies that streamline the process.
Resolvit Streamlines Divestitures
At Resolvit, we provide IT management and global talent solutions that empower success during a divestiture. Our experienced team guides companies through the entirety of a divestiture, while providing skilled talent ready to engineer, deploy and manage strategic infrastructure challenges – all while freeing up critical internal resources’ companies need to spin up new initiatives.
Fortune 500 companies turn to Resolvit to provide client leadership teams that manage company funding, track and evaluate project goals, and provide governance at each step in the divestiture process. In addition, our flexible on-site, nearshore, and offshore delivery teams have a wide array of experience in cloud infrastructure design and engineering, development, application porting, network segmentation and security, which proves invaluable for divesting companies looking to add both speed and quality to the process.
Check out our case study Vulnerability Management and learn more about how Resolvit ensured divestiture-related compliance for one the world’s largest retail financial services companies. Or contact us today to streamline your next divestiture.