Hey Guys,
Have you any advice on the best way to discover unwanted corporate subsidiaries/ divisions that are looking to be divested by their parent?
I'm looking to compile a database of financially/operationally distressed entities that are no longer part of a central strategy and need a starting point.
Ideally, I'm searching for an enterprise value of up to £200m.
If you have access to CapitalIQ you can look for subs. If not, you'll have to do it the old fashioned way. I can't recall the IFRS/UK GAAP rules on consolidating subs but if you go through annual reports there should be discussion of various subsidiaries/lines of business. Start with congolomerates and go from there.
Very difficult to do because ideally you'd need to value these assets and determine that they are trading at distressed or stressed levels. Segment level valuation would be difficult to do without detailed information per company and a detailed bespoke analysis by you. Reason why I say its hard for your purpose is because you're trying to use this as a screening mechanism to identify opportunities, so not a very good use of time to create bespoke analyses for hundreds of business units in order to identify a few "maybes".
This is typically the value senior bankers bring to the table. They have their ears to the ground and know which companies are trying to fence under performing or non-core assets to realign/rationalize their businesses.
A starting point may be to look for companies/industries that have a somewhat fragmented portfolio of holdings and suffered considerably as a result through the downturn. Likely they realized they need to re-align and rationalize their businesses in the downturn and are now in a market environment where they can execute on that introspection.
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