Procurement Divestment: Why Your Business Needs Expert Support

In discussions about business strategy, investment opportunities often dominate, while divestment—the process of selling, spinning off, or separating parts of a business—can be overlooked despite its critical impact. For companies navigating complex divestments, having procurement expertise at the heart of the process is essential.

Why Procurement Matters in Divestment

Divestments are complex and can carry significant legal, operational, and financial risks if not carefully managed. Yet, in many cases, procurement professionals are not consulted early enough, leaving businesses exposed to costly errors.

A dedicated procurement perspective ensures:

• Mitigation of supplier and contract risks
• Continuity of critical operations during the transition
• Cost-effective management of licensing and transferred assets
• Alignment of procurement strategy with the divested entity’s business objectives

By embedding procurement divestment expertise from the outset, companies can reduce risk and create value throughout the separation process.

Key Risks of Mismanaged Divestments

Legal Risks

• Non-compliance with contracts or licences can result in financial penalties.
• Absence of proper contractual coverage may expose the company to data, IP, or operational liabilities.

Operational Risks

• Disruptions in software, systems, or supplier services can affect both the divested and retained entities.
• Poorly planned transitions can have a knock-on effect on customers, potentially damaging reputation.

Financial Risks

• Additional licensing, transfer fees, and penalties can create unexpected costs.
• Inaccurate asset inventories may result in duplicated spending or lost capital.

Best Practices for Effective Procurement Divestment

1. Establish a Dedicated Divestment Office
   Divestment is not a part-time task. Assign a focused team to coordinate strategy, governance, and stakeholder management. Procurement should have a central role in this office to ensure contracts, suppliers, and assets are properly managed.
2. Take a Step Back
   Agree on roles, responsibilities, and information-sharing protocols before beginning the divestment process. Clear terms of engagement prevent misalignment and inefficiencies.
3. Conduct a Thorough Asset Review
   Work with asset management teams to identify which assets and contracts are moving to the divested entity. This ensures accurate transfers, prevents supplier exploitation, and allows for renegotiation of terms where appropriate.
4. Evaluate Transitional Service Agreements (TSAs)
   TSAs are often hastily implemented, with vague costs, scope, and exit plans. Assess which functions can be brought in-house within the divested entity to achieve efficiency and maintain service levels.
5. Build a Fresh Procurement Function
   Divestment is an opportunity for the divested entity to redefine procurement strategy. Avoid copying the parent company’s processes—assess capability gaps, realign suppliers, and implement a procurement approach tailored to the new business model.

Conclusion: Prepare for the Initial Period of Instability

Divestments often bring a period of disruption. By embedding procurement divestment expertise from the outset, companies can:

• Ensure continuity of operations
• Reduce legal and financial risk
• Unlock value from supplier relationships
• Create a sustainable, efficient procurement function for the new entity

If your company is planning a divestment, procurement support is not optional—it is essential. Early involvement from expert procurement consultants ensures the divestment proceeds smoothly, cost-effectively, and in alignment with strategic objectives.