Playing the double-sided divestment game

Private equity firms increasingly favour dual-track strategies when divesting from their portfolio

 
Private equity firms often pursue dual track strategies to divest from a portfolio company. The rationale is quite simple: minimise the transaction risk and maximise the sales proceeds through an additional exit option. However, there is no guarantee that this strategy eventually pays off. Effective dual track communications is an essential value-adding contributor to the success of the transaction. Dual tracking is an increasingly popular phenomenon: be it specialty chemicals company Cognis or cable operator Kabel Baden-Württemberg, most of the important disposal processes over the past years have been (more or less publicly) designed as dual track processes. This comes as no surprise given the resurgence of the equity markets and the easing of debt constraints as a prerequisite of a credible dual track strategy. A recent example is industrial supplier Norma Group. Based on a solid business model, a future-oriented strategy, and consistent communications, Norma went public on April 4, 2011, and reached a total issue volume of 386 million euros. The successful initial public offering (IPO) is testimony to the heightened transaction certainty of dual tracks in times of high market volatility.

Brigitte von Haacke

Dr Brigitte von Haacke is a partner at Hering Schuppener Consulting and works out of the Frankfurt office. She advises clients on all aspects of strategic positioning, M&A transactions and dual track processes. She is a graduate of the Cologne School of Journalism and studied Economics at the University of Cologne, where she also completed her PhD thesis.

Christian Zeintl

Christian Zeintl works as a client executive in the M&A team at Hering Schuppener Consulting. He graduated from the Berlin University of the Arts with a master’s degree in strategic communications and planning. Zeintl holds an MBA from the Grenoble Graduate School of Business.