PHS Consulting - Business Divestments Case Study

As part of its strategic restructuring this major chemical manufacturer divested itself of many commodity chemical businesses. As a consequence large integrated manufacturing facilities that had previously operated by a single management team were divided and found themselves in separate companies with different owners. As part of this transition it was necessary to negotiate commercial arrangements for all services between these businesses. The range included massive strategically critical raw material supplies, utilities, infrastructure, services and IT.

The first step in the project is to identify all these interactions which can be as many as one hundred for complex businesses. For each of these service level agreements need to be prepared and combined with contractual documents for presentation to the acquiring party. Then the detailed negotiations begin leading to the final contracts.

A large number of people are involved; functional managers, legal advisors, and those working on other aspects of the transaction. They all need to be kept abreast of progress. Further, the details of the negotiation must complement other aspects of the transaction to ensure that all issues are dealt with in a consistent way. The nature of business divestments is that there is a very tight timetable against which to complete the negotiations.