While acquisitions remain popular for expansion, a growing number of companies are turning to divestitures — shedding non-core assets to streamline operations. This strategy is emerging as a key driver for raising capital, sharpening business focus and unlocking shareholder value.

Recent analysis of global M&A trends by Baker Tilly International, in partnership with Mergermarket, reveals a rise in divestiture activity, particularly among businesses with operations in the US, the world’s largest M&A market. Carve-outs, where parent companies spin off business units to operate independently, are increasingly favoured by corporates aiming to boost agility and shareholder returns. This signals a shift towards leaner, more focused organisations.

This trend is set to reshape industries, potentially boosting M&A activity, promoting sector consolidation and innovation as companies aim to strengthen their market positions.

The divestiture dividend

"Divestitures are emerging as a critical strategy across several sectors — especially in industries like technology, healthcare and industrials, where agility and innovation are paramount," explains Xavier Mercadé, CEO of Baker Tilly in Spain.

Nearly half (48%) of dealmakers surveyed are considering further divestitures or carve-outs, having completed at least one transaction in the past 12 to 24 months.

One of the strongest arguments for divestitures is the overwhelmingly positive outcomes they deliver, according to Harsh Maheshwari, Head of Corporate Finance at Baker Tilly International.

“Beyond the immediate operational and financial gains, divestitures provide companies with the financial flexibility to pursue new investments. In fact, 40% of respondents to our survey indicated that proceeds from recent divestitures were reinvested in acquiring other businesses. This allowed them to quickly pivot towards more promising market segments or emerging technologies.

“The strategic use of divestiture proceeds demonstrates that these transactions are not just about shedding assets or cutting costs. They're increasingly seen as a powerful tool for unlocking capital to fund transformative initiatives and drive long-term value creation."

We are seeing a number of divestitures in New Zealand, but with a more traditional motive, according to Baker Tilly Staples Rodway Auckland Corporate Advisory director Nick Li.

“In New Zealand, some divestitures are following the global pattern of entities selling down non-core business units after a strategy reset, although the majority we are seeing are still for business succession purposes,” he says.

Part of a bigger picture

Divestitures are rarely standalone decisions; they are often part of broader corporate restructuring efforts. According to 62% of survey respondents, their recent divestitures were integrated into comprehensive plans to reorganise and streamline operations.

This suggests that dealmakers are adopting a holistic approach to portfolio management, using divestitures as a tool to reshape their organisations for future growth and enhanced competitiveness. By aligning divestitures with larger restructuring initiatives, companies can drive more impactful transformations and bolster their market position.

However, divestitures are complex endeavours that require meticulous planning, execution, and communication.

“Maximising the valuation of divested assets is essential for dealmakers, with transparent financial reporting, effective marketing and investing in technology identified as key strategies," says Michael Sonego, a partner at Pitcher Partners, Australia.

“Clear financials reduce risk and attract higher bids, while showcasing growth potential through effective marketing enhances buyer interest. Additionally, by investing in technology, companies can highlight innovation, positioning the asset for future success and ultimately commanding a higher price."

Read the full report below, including best practices and actionable steps to follow if you are considering or planning divestitures of your own.