Perspectives

Divestiture and Business Portfolio Planning in Japanese Companies

December 2016 Update

With the establishment in recent years of Japan’s Stewardship Code and the Corporate Governance Code, there has been increasing demand for management focus on enterprise value and capital efficiency, and there is no doubt that divestments of noncore or unprofitable businesses have become a key management issue shared by many Japanese companies. Deloitte Tohmatsu Financial Advisory LLC, in association with Mergermarket explains how companies can prepare proactive divestiture policies by integrating divestiture-related planning into strategic business portfolio management.

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The highlights from the Newsletter are as follows.

“Divestiture” is the watch word of the day in Japan, with corporate divestments accounting for 22% of the country’s first half M&A transactions for 2016. Rooted in traditional values of continuity and succession, patriarchal Japanese companies have often been reluctant towards divestitures. In today’s quick-changing macroeconomic conditions, however, divestitures are becoming increasingly viable as a proactive exit strategy for noncore or unprofitable assets, and as a way of streamlining existing businesses to sustain long-term growth.

Kazunari Watanabe, Managing Director, and Terushige Asakuno, Senior Director, Deloitte Tohmatsu Anchor Management, provide detailed commentary on the issues and solutions for effective portfolio management in Japanese companies. 

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