Divestitures

Thinking of divesting (carving-out) or closing a business or manufacturing plant/facility? EMS IT leaders not only understand technology, but just as important, understand all aspects of the business deal and how it impacts the IT Landscape — which is key to a successful divestiture. Let our experienced business/IT resources help you be successful with proper planning, IT due diligence, managing confidentiality, inventory assessment, marketing IT assets, transitional planning, and assisting with negotiations effectively with acquiring companies. The following not only identifies important IT tasks and responsibilities that can be found in any playbook, but also emphasizes very important aspects of a divestiture requiring proper knowledge and expertize when customers engage an EMS IT leader.

Proper Planning (IT Due Diligence)

Proper planning when divesting manufacturing facilities makes all the difference. Without it, plants and manufacturing facilities stay on the market a long time, sale cycles take years (not months) to finalize, buyers walk away from the table, and sellers end up dealing with several legal issues. All this can be avoided and divestitures can be seamless and transparent with proper experienced experts leading the way.

Confidentiality

Often divesting a manufacturing facility or company must take into consideration confidentiality, especially in the early stages. Sensitive information (electronic data) must be controlled, managed, and properly distributed at exact times. Information falling into the wrong hands can lead to several legal, human resource, and intellectual property issues that can ruin a deal.

Inventory Assessment

Defining what assets (businesses, products, resources, buildings, utilities, manufacturing equipment, computer equipment) will be sold and more importantly how they will be sold and transitioned to a potential buyer is fundamentally imperative to build the framework of an attractive divestiture. It’s the basic building block of a successful divestiture

Marketing IT Assets

Once assets are defined, how they are positioned or marketed will most likely determine how successful one will be to find interested acquiring companies. There are many ways to sweeten the deal, make it more attractive, and bring interested qualified buyers to the table much faster. Plants and businesses not marketed correctly usually stay on the block much longer, divesting companies spend numerous cycles with unqualified or unsure buyers.

Negotiating with Buyer

Negotiating a divestiture from a seller’s perspective correctly is extremely important to close a deal effectively. Understanding buyer’s requirements, limitations, and what will (or will not) be a deal beaker is critical as is creating a win-win business deal for both parties. One wrong decision and the buyer walks to the next deal.

APA / TSA Negotiations

Asset Purchase Agreements (APA) and Transitional Services Agreements (TSA) are the necessary legal documents that sometimes take several months to agree on as sellers/buyers continuously negotiate and leverage. In most cases, divesting companies have the upper hand, can and should facilitate and accelerate these agreements to make negotiations more equitable and agreeable to both the buyer and seller.

IT Asset Negotiations

Preparing IT assets for sale and negotiations is critical for a successful divestiture. Knowing how to present, prepare, and propose transferring of assets to ensure a smooth transition for acquiring companies ensures success. Not preparing properly, divesting companies spend much more time and money than planned.

Transfer of Ownership

After IT due diligence, negotiations, and final signatures, transferring an operational or non-operational facility or business required a strong Change Management team, analysis of data risk, defining cease manufacturing, and decommissioning of GMP assets. Experienced knowledgeable resources that understand how to cut-over a business play an important role

Cease Manufacturing

Understanding how to shut down an operational business, managing inventory buildup, supply chain impact, dealing with quality and compliance, along with staying compliant and filing properly with regulatory agencies is a delicate balance as a plant transitions to acquiring companies.

Change Management

Managing significant change is never easy when divesting manufacturing facilities or businesses. Cease manufacturing, product transfer, employee severance or transition, and changing business processes must be effectively managed, planned, and communicated to all levels. Without a properly planned divestiture and transition plan change becomes overwhelming not only to the divesting company but also the acquiring company.

Data Risk Management

Intellectual property, trade secrets, manufacturing processes, quality and compliance information, and human resource data is all information and data that must be managed and held confidential during a divestiture to ensure the divesting company is not put into a competitive disadvantage

Decommissioning and Records Retention

In GMP running facilities decommissioning equipment and computer systems along with Records Retention is often forgotten about or assumed to be a trivial task left to others. On the contrary, it can be one of the most important activities to be done when closing or selling a business or facility. Business / product legal liability exposure can be tremendous without properly maintaining GMP paper / electronic records. Additionally, decommissioning can be very expensive and time-consuming without proper knowledge and understanding.