Divestiture Governance: Establishing Effective Steering Committees
Divestiture Governance: Establishing Effective Steering Committees
Blog Article
In the fast-paced world of mergers, acquisitions, and corporate restructuring, divestitures are strategic moves that can reshape a company’s future. Yet the process of successfully separating and selling a business unit is anything but straightforward. Behind every high-value divestiture stands a robust governance structure—and at its core is an effective steering committee.
Divestiture steering committees act as the command center of the entire transaction. They are responsible for setting strategic direction, monitoring risks, resolving roadblocks, and ensuring that both short-term milestones and long-term objectives are met. Without strong governance and clear leadership from such a committee, even the most promising divestiture can falter.
Why Governance Matters in Divestitures
Divestitures are often complex and emotionally charged events, involving multiple stakeholders with differing priorities. Legal, tax, operational, human resources, IT, and communications teams must all align around a shared objective while operating under tight timelines and evolving market conditions.
This cross-functional collaboration demands structured oversight, which is where divestiture governance becomes essential. An effective steering committee provides a framework for decision-making, accountability, and transparency. It keeps the project team focused on the end goal while managing risks, enabling adaptability, and maintaining strong stakeholder communication.
Building the Right Steering Committee
A successful divestiture steering committee begins with the right mix of expertise and leadership. Members should represent all core functions involved in the divestiture, including finance, legal, operations, human resources, tax, IT, and corporate strategy. Depending on the nature of the deal, additional specialists, such as compliance officers or communications leads, may also be essential.
The steering committee is typically chaired by a senior executive—often the CFO or a corporate strategy officer—who has both the authority and the perspective to balance day-to-day decisions with long-term strategic alignment. The committee must be small enough to enable efficient discussions but diverse enough to capture the full complexity of the deal.
Defining Roles and Responsibilities
One of the first tasks of a newly formed divestiture steering committee is to clearly define roles and responsibilities. Ambiguity in decision rights or ownership of tasks can lead to bottlenecks, rework, and misaligned expectations. Key roles often include:
- Chairperson: Sets the agenda, facilitates meetings, and ensures strategic alignment.
- Project Management Lead: Oversees the execution of the workstream plan, tracks progress, and escalates issues.
- Functional Representatives: Provide subject matter expertise from their respective departments and ensure execution of assigned tasks.
- External Advisors: Often, companies engage divestiture advisory services to supplement internal capabilities and provide third-party validation of plans and assumptions.
Setting the Governance Framework
Governance is about more than simply gathering the right people; it also requires clear processes for decision-making, issue resolution, and communication. The steering committee should establish:
- A clear charter: Outlining scope, objectives, and authority.
- Meeting cadence: Frequent enough to monitor progress but not so frequent that it becomes a drag on execution.
- Reporting structures: Defining which metrics and milestones will be tracked and how escalations will be handled.
- Decision-making protocols: Ensuring alignment on what requires consensus versus what can be delegated.
A strong governance framework ensures that no issue falls through the cracks and that everyone involved knows who to approach for guidance or decisions.
The Role of Divestiture Advisory Services
Many companies, particularly those undertaking their first divestiture or a complex cross-border transaction, turn to divestiture advisory services to help design and support their governance structure. These external experts bring deep transaction experience, proprietary best practices, and an objective perspective that can help the steering committee stay focused on critical success factors.
Advisors can also help facilitate steering committee workshops, support scenario planning, and provide independent assessments of readiness at each phase. With divestiture advisory services acting as both coach and sounding board, internal teams can approach the transaction with greater confidence and clarity.
Driving Alignment and Transparency
A divestiture involves more than financial modeling and contract negotiations. It touches customers, employees, regulators, and shareholders—all of whom require transparent and timely communication. The steering committee is responsible for defining the communication strategy and ensuring consistency across all channels.
Internal alignment is just as important. Cross-departmental teams need clear direction and up-to-date information to avoid duplication of efforts, missed deadlines, or conflicting priorities. Effective steering committees prioritize clarity in decision-making and consistent stakeholder messaging.
Agility and Risk Management
Divestitures rarely proceed exactly as planned. Regulatory hurdles, shifting market conditions, and unexpected operational issues can all introduce complications. The steering committee’s ability to quickly identify and respond to these risks is critical.
An agile steering committee proactively reviews risk scenarios, prepares contingency plans, and maintains close coordination with external advisors, including divestiture advisory services, to adjust strategies when necessary. This flexibility allows the transaction team to navigate uncertainty while protecting value and maintaining timelines.
Post-Transaction Oversight
The work of the steering committee doesn’t end at closing. Post-transaction activities—such as transition service agreement (TSA) management, separation clean-up, and performance measurement—also require coordinated oversight.
In this phase, the committee's focus shifts to ensuring a smooth handoff to the buyer, monitoring TSA execution, and capturing lessons learned for future divestitures. Post-closing governance helps ensure that value realization doesn’t stop when the deal papers are signed.
Governance as a Strategic Enabler
Divestitures are high-stakes, high-complexity endeavors that demand more than just technical execution. Strong governance, anchored by an effective steering committee, is a defining factor in the success or failure of a divestiture. From the earliest planning stages through post-close integration, a well-structured steering committee ensures the alignment, accountability, and agility needed to navigate complexity and maximize value.
By combining internal expertise with external insights from divestiture advisory services, organizations can approach divestiture governance with confidence. In the end, it is this combination of strategy, structure, and adaptability that transforms a divestiture from a transaction into a strategic achievement.
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The CFO's Guide to Divestiture Financial Planning
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