Divestiture Advisory for UK Businesses: Unlocking 35% Higher Exit Value

 

Divestiture Advisory

In an unsettled market, well-executed divestitures are no longer a cost-cutting afterthought they are a deliberate value-creation play. For UK boards and CFOs, partnering with experienced divestiture consultants can convert a slow or uncertain sale into a transformational exit that captures strategic buyers, preserves talent, and protects pricing. This article explains how an advisory-led divestiture programme can deliver materially higher exit value, lays out practical steps UK sellers should take, and uses up-to-date 2025 market evidence and worked examples to show how a 35 percent uplift in exit value is achievable in many carve-outs.

Why divestitures are front-of-mind in 2025 UK dealmaking

UK M&A showed mixed signals across 2025. PwC’s H1 2025 UK M&A data reported that volumes fell by over 19 percent versus H1 2024 while total deal value fell by 12.3 percent to £57.3 billion, even as average deal size rose. That mismatch fewer deals but stronger pricing for well-prepared assets means sellers who prepare carefully can still secure premium outcomes.

The Office for National Statistics continues to publish quarterly M&A and disposes of data that underline the same point: the number of transactions is depressed compared with earlier cycles but value can be concentrated in well-managed exits. In this context, disciplined divestiture planning has become a competitive advantage.

What “35 percent higher exit value” means (and how it’s credible)

Saying an exit can be 35 percent higher is a shorthand for a combination of effects that advisers routinely target: a higher transaction multiple, a cleaner earnings profile (higher sustainable EBITDA), lower buyer discounting for separation risk, and reduced stranded costs that otherwise depress bids. Leading advisory studies and surveys show that sellers who take a proactive, structured approach to separations and value story tend to outperform peers. Bain, McKinsey and Deloitte all document that disciplined divestiture playbooks and divestiture-ready organisations capture meaningfully better transaction outcomes.

Put numerically, a 35 percent uplift can come from one or a mix of the following:

• a higher sale multiple (for example 8 times EBITDA to 10.8 times EBITDA which is a 35 percent multiple uplift),

• a higher sustainable EBITDA (for example by eliminating £1.5m of stranded cost on a £10m EBITDA asset),

• or lower buyer discounts for separation risk because contracts and IT have been cleaned up.

Below is a concrete arithmetic example that makes the math explicit.

Worked example (digit-by-digit arithmetic)

Assume a carve-out business has sustainable EBITDA of ten million pounds sterling (that is, £10,000,000).

1. Sale at current market multiple of eight times EBITDA:

• 8 × £10,000,000 = £80,000,000.

2. Target sale at improved multiple after advisory intervention of 10.8 times EBITDA (this is 8 × 1.35):

• First compute 1.35 × 8 stepwise:

• 1 times 8 = 8,

• 0.3 times 8 = 2.4,

• 0.05 times 8 = 0.4,

• Sum 8 + 2.4 + 0.4 = 10.8.

• 10.8 × £10,000,000 = £108,000,000.

3. Uplift in exit value:

• £108,000,000 minus £80,000,000 = £28,000,000.

4. Percentage uplift:

• £28,000,000 ÷ £80,000,000 = 0.35 which equals 35 percent.

This shows how a combination of better multiple and/or improved EBITDA (which advisers help deliver by removing stranded costs and articulating standalone margins) leads to a 35 percent larger exit cheque for shareholders.

The levers divestiture consultants use to unlock value

Specialist divestiture consultants deploy a sequence of interventions that, together, materially improve buyer perception and pricing. The principal levers are:

1. Value story and buyer mapping — crafting a standalone narrative that shows how the business will perform in a buyer’s hands and identifying buyers who will pay strategic premiums (corporates, private equity, sovereign or strategic financial sponsors). Bain and others emphasise that identifying a “better owner” is central to extracting premium value.

2. Clean separation plan — removing “stranded costs”, reducing ongoing parent entanglements in IT, contracts, HR and supply chains. Deloitte’s Global Divestiture Survey shows divestiture-ready organisations consistently achieve better transaction value, lower separation cost and less stakeholder risk.

3. Operational uplift ahead of sale — quick programmatic improvements to margin (pricing clarity, working capital optimisation, targeted cost takeout) that raise sustainable EBITDA base the buyer will believe in.

4. Data room, carve-out models and financial control — robust financials, clean carve-out historics and three-way standalone forecasts reduce buyer due diligence discounting.

5. Talent and retention planning — early retention packages, leadership clarity and TUPE-ready processes avoid value erosion from talent flight.

6. Deal structuring and sale route selection — choosing trade sale, private equity sale, or spin-off depending on which route produces better RTSR (relative total shareholder return) and timing the market.

What the 2025 UK market signals mean to sellers (quantitative context)

Some up-to-date 2025 figures and context for UK sellers:

• PwC H1 2025: UK deal volumes fell more than 19 percent and H1 deal value fell 12.3 percent to £57.3 billion, but average deal sizes increased a sign that prepared, high-quality assets are still commanding price.

• Deloitte’s divestiture research (2024 survey) highlights a large pool of private equity dry powder globally and the readiness advantage of sellers who have a divestiture playbook. Deloitte reports private equity reserves in aggregate measured in trillions, indicating strong potential buyer demand for attractive carve-outs.

• McKinsey and other strategy advisors emphasise that poor separation planning causes stranded costs and depressed exit prices; conversely proactive separation raises the multiple buyers are willing to pay.

These data points mean UK boards should not assume that weaker transaction volumes prevent premium exits. Instead, the gap between prepared sellers and reactive sellers is widening — and advisers help close that gap.

A 6-point execution checklist for UK boards and CFOs

If you are planning a sale in the next 6 to 18 months, prioritise these actions now:

1. Run a realistic carve-out financial model with independent stress tests and standalone forecasts.

2. Quantify stranded costs line-by-line and own the remediation plan (IT, leases, shared services).

3. Prepare a targeted buyer list and a bespoke value case for each buyer type.

4. Stabilise leadership and retention: identify critical roles and budget for retention where needed.

5. Fix key contracts and supply continuity to reduce buyer risk discounting.

6. Engage a specialist divestiture advisory team early to run commercial, financial, tax and separation workstreams in parallel.

Following these steps moves you from a fire sale posture to a “prepared seller” posture that buyers reward with higher multiples. Empirical adviser work and case studies from the big consultancy houses show that the difference between reactive and proactive separations is often the difference between value destruction and value capture.

When to hire divestiture consultants (and what to expect to pay)

Early. The moment management concludes an asset is noncore, bring in divestiture specialists. Typical advisory engagement phases are diagnostic and opportunity framing, separation engineering (legal, tax, HR), operational uplift and sale execution. In the UK mid-market, a lean advisory team plus specialist consultants for carve-out modelling and IT separation will typically cost less than one percent of an expected exit value yet can preserve or add many multiples of that fee in incremental consideration especially where buyer competition is cultivated and separation risk is visibly mitigated. Deloitte, Bain and Kearney published case studies that confirm outsized returns from early, structured advisory involvement.

Pitfalls and common failure modes

• Late separation planning — leaves the acquirer to assume separation risk, which reduces bids.

• Insufficient data and carve-out accounts — causes discounts in due diligence.

• Underestimating employee and supplier risk — leads to operational shocks and private equity haircutting offers.

• Selling to the wrong buyer — trade buyer synergies or financial sponsor strategy mismatch can underprice the asset.

Avoiding these pitfalls is what divestiture consultants are hired for.

For UK businesses in 2025, divestitures are not just disposals they are strategic exits that, when run properly, can generate significant incremental value. By combining a strong value story, disciplined separation planning, operational fixes and targeted buyer outreach, sellers can plausibly aim for up to 35 percent higher exit value compared with reactive or poorly planned sales. Market data from PwC, Deloitte, Bain and McKinsey underline that disciplined execution and divestiture readiness separate winners from the rest. If you are preparing a carve-out or disposal and want a practical, UK-market plan to target superior pricing and protect capital, engage specialist divestiture consultants early and run the six-point checklist above.