Shareholder activism prompts rise in carve-outs

Author: John Crabb | Published: 3 May 2017

Global carve-out transaction volumes are rising year-on-year as companies look for portfolio optimisation amid growing pressures to perform, according to sources.

Recently published analysis by Baker McKenzie suggests that carve-outs now account for around 10% of global M&A. Carve-outs offer good value to enterprises looking to shed non-core assets, as well as those opportunist portfolio builders making the acquisitions. The proportion of carve-out deals as a percentage of all divestments has also grown significantly every year since 2009, according to the study.

Sarkis Jebejian, corporate partner at Kirkland & Ellis, said that the rise is a continuation of a broader trend that has been prevalent for some time. For both internal and external reasons, larger corporates have taken steps to proactively look at their portfolios and businesses, and make necessary adjustments.

Carve-outs are just one way that this trend manifests itself, he said, suggesting that standalone spin-offs...