Divestiture is one of the most challenging, complex, and time-consuming processes in the M&A industry. The preparation alone can be difficult, as you will present a fully integrated business that has never been apart from the mother company as a separate stand-alone entity. This can be a nightmare from the financial and HR point of view.
Because of all these complexities, most companies hire banks to help them prepare the sale. A bankers' most significant contribution to the entire process is finding the buyers, preparing the Confidential Information Memorandum (CIM), and helping manage the diligence.
However, hiring a bank is not a requirement. It is also possible to execute a divestiture without the help of a bank. Do you want to know how?
Banks offer huge help when it comes to divestitures. If you choose to operate without their help, you need to make sure that your company has the proper resources. It will take a lot of manpower and effort to execute a divestiture without a bank.
Although, forgoing banks have their benefits. For starters, they aren't cheap. They charge a lot of money and often charge based on the business's selling price. If you are looking to save money, then doing the deal on your own might be the best option.
Another reason to skip banks is the speed of transactions. You know your business a lot better than anyone, and bringing in a banker will force you to spend time explaining to him the business. In a perfect world where you planned the divestiture ahead of time, you would have already done so much preparation that the banker's role would be reduced.
So, if you are a large company with proper resources and looking to save money or speed up your divestiture process, you should consider forgoing the use of a bank. If you want to the exact process of executing a divestiture without banks, check out this course from VP of Corporate Development at Ansys, Russ Hartz.