Divestment-Management: Success Factors in the Negotiation Process of a Sell-off

For many companies, divestments represent an important strategic instrument to proactively manage their business portfolios. However, many transactions do not live up to the sellers' expectations, as most sellers do not succeed in overcoming the information problem of the buyer. Therefore, transactions often result in prolonged negotiations and unexpectedly lower selling prices. Despite its undeniable importance, there is little empirical research that focuses on the conceptualization and operationalization of success factors in the negotiation process of a sell-off and the performance impact of these success factors. This article, therefore, analyzes the information problem between the seller and the buyer of a business unit in a sell-off. Critical success factors to overcome the information problem are theoretically conceptualized and operationalized, and their performance impact on divestment success is examined. Based on a survey of 251 companies and using structural equation modeling, we show that five of six theoretically derived success factors have a significant positive effect on divestment success. Particularly, the information quality of the due diligence and the credibility of communication activities have strong performance impacts. The article closes with managerial implications derived from the empirical analysis and directions for possible future research.