Exiting an Underperforming or Non-Core Business
Exiting an Underperforming or Non-Core Business for Corporates with a large number of underperforming or non-core businesses in major industries in Nigeria has become absolutely critical in light with the current state of the Nigerian economy, particularly in light of the drop in Currency Naira value and the falling international market oil prices.
One of the ways to achieve this objective is to subject one’s firm through exiting underperforming and non-core businesses. Underperforming or non-core businesses are businesses that are not generating expected or necessary return.
Management will usually look at all option, including turnaround and/or refinance – before deciding on an exit decision. Any exit decision will be a painful one as it will typically affect a number of people and invariably involve the loss of employment.
There are many reasons why a business might choose to close or sell a unit or business. These include one or more of the following:
- The unit is loss making and there is a need to stem the group’s/company’s losses
- It is nearing the end of its useful economic life
- If has lost a key contract, or specialist management, or employees.
- It is a business which no longer fits overall strategy.
- It has been adversely affected by economic or legislative changes
This article will take you through the process of exiting such non-core businesses. it will explain the problem, limitations and also what the options for exit are.