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Is Your Business Fit for the Next Normal?

November 30, 2021
By Richard Hawes, Simon Harrison, Matt Roe & Stuart Pugh

The impact of the COVID-19 pandemic almost immediately propelled many businesses into survival mode. We are already seeing signs of the post-pandemic world creating structural and systematic changes, such as a greater focus on near-shoring and increased home working. It is expected that recovery will be highly asymmetric across regions and sectors.

  • Most sectors will need to reinvent themselves in order to thrive. Defensive and offensive strategies will have a strong influence in shaping the “next normal” sector environment.
  • We are entering an important phase in which measures put in place over the last 18 months need to be adapted for a longer-term strategy. We see this as a key next step to enable businesses to optimise performance and strengthen for the future.
  • For some businesses, this will involve reshaping the organisation, leveraging key strengths and value drivers, and focusing time and investment on core operations as they seek to navigate unchartered waters.
  • Tackling non-core or underperforming divisions could be a defining moment for a business’s future; one that could create tangible benefits to future profitability and enhance shareholder value.
  • Now is the time to be proactive in dealing with parts of a business that are no longer fit. This will help stem the drain on capital and management resources and help avoid a potential crisis caused by delaying difficult decisions.


Key Findings

European carve out activity by Special Situation investors has increased materially since 2018, a trend which has continued throughout the COVID-19 pandemic. Key observations include:

  • Initial drop off in carve out transactions at the beginning of 2020: This was driven by investors who paused their activities because they were uncertain about how the onset of the COVID-19 pandemic would impact their business.
  • Significant uptick in activity from Q4 2020: This demonstrated an increased appetite from investors to deploy capital as confidence in the post-pandemic recovery improved. 45 carve out deals were recorded in the period from Q4 2020 to Q2 2021, with the 20 carve outs in Q4 2020 representing a doubling of deal levels versus Q4 2019.
  • Carve out focus: Special Situation investors have regularly commented on how their deal pipelines over the past 18 months have been much more carve out focused, notably in the industrial and consumer products sectors, while the broader accelerated M&A market has remained quieter.
  • Early identification of separation issues: This remains key to achieving a successful carve out deal, with there often being a host of complex financial, operational, legal and reputational considerations pertaining to the target assets / business. Through direct experience on recent transactions, we have found that TUPE(3), TSA(4) and central cost allocation across the vendour groups are often key areas of bidder focus and invariably impact on deal value and deliverability.


Where we can Assist
  • Implementing an exit without a well-thought-out and carefully structured plan can negatively impact overall finances and the business reputation.
  • We can help to mitigate risks, freeing up valuable capital and management time that was previously spent on underperforming and non-core parts of a business.
  • We draw upon a multidisciplinary and global team of experts to provide hands-on support to fix, sell or close underperforming and/or non-core areas of business.


  • Strategy assessment (full / partial sale)
  • Separation risks and opportunities
  • Value drivers
  • Feasibility analysis

Wind Down

  • Exit route analysis
  • Process & timeline
  • Risk identification
  • Impact analysis (financial, reputation and operational)
The views and opinions in these articles are solely of the authors and do not necessarily reflect those of Teneo. They are offered to stimulate thought and discussion and not as legal, financial, accounting, tax or other professional advice or counsel.

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