Letting Go to Grow: Divestitures as Growth Strategy

Why Divestitures Are Your Most Underused Growth Strategy

For years, the corporate playbook was simple: acquire, acquire, acquire. Divestitures were often seen as a necessary evil not a growth strategy—a way to dump underperforming assets or placate activist investors. The mindset was “let go to throw away.”

But the game has changed.

In today’s volatile market, characterized by geopolitical tensions, rising interest rates, and relentless disruption, executives are under unprecedented pressure to rebalance their portfolios with speed and precision. According to a groundbreaking report from Accenture Strategy, a new paradigm is emerging: “Letting go to grow.”

Divestitures are no longer just a tactical retreat; they are a strategic weapon for reinvention and a crucial lever for growth that, until now, has been a largely underutilized muscle.

The Compelling Case for Strategic Divestment

The data makes a powerful argument. Accenture’s analysis of deals from 2016-2020 reveals that companies that completed divestitures achieved an average two-year Total Shareholder Return (TSR) that significantly outperformed the S&P 500. More strikingly, these divesting companies outperformed those that only made acquisitions during the same period.

Divestiture Performers Outperform S&P Companies Return

But here’s the real insight: it’s not about doing as many deals as possible. The “sweet spot” for divestitures is surprisingly focused. Companies that completed two to four divestitures over the four-year period saw average returns of 25.1%, dramatically higher than those that did just one deal (nearly 20%) or those that did more than five (a mere 1%).

The message is clear: strategic, selective divestitures are repeatable recipe and strategy for value creation and growth.

The Critical Shift: From Transaction to Operation

One of the biggest mistakes companies make is treating a divestiture like a “merger in reverse.” They pour all their energy into the deal stream—the negotiations, due diligence, and legal paperwork—with the sole aim to “get it done.”

This is a costly error.

In a merger, 80% of the work happens after the close. In a divestiture, it’s the opposite. The real value—and risk—lies in the operational stream: the complex, nuts-and-bolts work of separating the new entity from the parent company.

Focusing disproportionately on the transaction at the expense of the operation is a surefire way to leave value on the table, damage TSR, and create a messy, drawn-out separation.

4 Secrets to Adopt Divestitures as Growth Strategy

So, how do leading companies get it right? The Accenture report highlights four key secrets.

1. Master Shared Services and “Staple” Outsourcing

Instead of relying on lengthy, messy Transitional Service Agreements (TSAs), savvy leaders are using “staple shared services.” This involves pre-packaging a value-creation option with a third-party outsourcing provider as part of the sales teaser.

Why it works:

It creates a more robust auction process and entices buyers by underwriting EBITDA uplift.
It enables a faster, cleaner break from the parent company, accelerating the containment of stranded costs.
It frees up management to focus on core operations and strategic growth, rather than getting bogged down in post-close administrative support.

2. Champion Transparency Over Ambiguity

Divestitures create uncertainty and anxiety among employees, customers, and suppliers. Ambiguity is the enemy of morale and productivity. A robust, transparent change management strategy is non-negotiable.

Key actions include:

Synchronized Communications: Coordinate with the buyer on a multi-channel plan for all stakeholders.
Leadership Engagement: Leaders must role-model the new culture and demonstrate buy-in.
Employee Journey Mapping: Bring clarity to a complex process by transparently mapping the change journey for every employee.

3. Leverage Technology for Speed and Security

A divestiture is a catalyst to leapfrog technology, not just replicate old systems. The goal is to deliver separation with speed, which in itself creates significant value.

Focus on:

Speed and Security: As data moves and system access shifts, cybersecurity risks heighten. Proactively managing this is critical.
Third-Party Tech Partners: Leverage cloud and AI to accelerate data migration, redact confidential information automatically, and reduce risks from manual intervention.

4. Prioritize Brand Strategy from Day One

A divestiture is a unique opportunity to reimagine a brand. A poorly executed brand transition can create market confusion and erode value. When done right, it sets the foundation for long-term growth.

Take the example of Wolfspeed. As part of a multi-year transformation involving divestitures, the company completely reinvented its brand with a comprehensive, multi-channel campaign. The result? A 68% increase in brand equity within six months of launch.

The NeoForm Take: Building a ‘Serial Divestor’ Mindset

The era of the one-off divestiture is over. The greatest returns go to those who build a repeatable capability—a “serial divestor” mindset. This requires a fundamental shift in how corporate leadership views portfolio management.

The three imperatives for leaders are to use divestitures as a growth strategy:

Transcend the Transaction: Obsess over the operational stream, not just the deal mechanics.
Accelerate with the Right Capabilities: Use third-party expertise, technology, and data to minimize TSAs, contain costs, and close faster.
Learn from the Leaders: Focus on manageable, strategic deal sizes that make the transaction worth the cost and effort.

At NeoForm, we understand that a divestiture is not an end, but a powerful beginning. It’s a strategic move to sharpen your focus, free up capital for innovation, and ultimately, fuel your next phase of growth.

🔗 Links for More:

Read the full report on Accenture website or NeoForm LinkedIn page.

📌 About NeoForm:

At NeoForm Business Partners, we provide the strategic advice, transactional expertise, and executional support needed to navigate this complex environment—whether you are acquiring a transformative capability, pursuing a scale merger, or preparing a business for divestiture.

Visit NeoForm blog for more insights on Mergers & Acquisitions & Divestitures and private markets trends.

🔗 Related Readings:

Ready to unlock the hidden value in your portfolio? Contact our partners to start a conversation about your 2025 Mergers, Acquisitions and Divestitures strategy.