Divestiture Simulation

Divestiture in Finance Simulation is an immersive and practical training experience where participants step into the role of corporate decision-makers managing the sale or spin-off of a business unit or assets.

Divestiture Simulation Overview

The Divestiture in Finance Simulation replicates the strategic and financial challenges companies face when divesting a non-core division or asset. Participants learn to prepare standalone financials for the unit being divested, build pro forma financial models that forecast impacts on the parent company's valuation and operations, and assess the transaction's effects on shareholder value.

The simulation covers the full divestiture lifecycle—from analyzing the target business segment, modeling its financials independently, to executing the sale and communicating outcomes to stakeholders. It highlights how divestitures can unlock value, improve focus, and reallocate capital effectively.

Customizable scenarios reflect real-world complexities such as regulatory issues, market responses, and negotiation dynamics.

Divestiture Simulation Concepts

Participants work through realistic scenarios, which can be customized to emphasize or exclude specific topics depending on the learning goals. This modular structure allows the simulation to be tailored to any type of session. Key concepts include:

Definition and strategic rationale of divestitures
Standalone financial statement preparation for divested units
Pro forma financial modeling and valuation impact analysis
Accretion/dilution effects on key financial metrics
Deal structuring and transaction execution
Accounting for deconsolidation and reporting changes
Regulatory, compliance, and market considerations
Stakeholder communication and investor relations
Impact of divestitures on corporate focus and financial health

Gameflow

What Participants Do

In the simulation, participants will:

Analyze financial data and segment business units
Prepare standalone financial statements for divested entities
Construct detailed pro forma financial models
Evaluate potential buyers and transaction structures
Simulate negotiation and deal closing processes
Assess post-divestiture impacts on parent company valuation and operations
Prepare investor updates and internal reports
Manage regulatory and compliance requirements
Apply strategic decision-making under uncertainty and market dynamics

Learning Objectives

By the end of the simulation, participants will be able to:

Understand the strategic and financial implications of divestitures
Build and interpret standalone and pro forma financial models
Assess valuation accretion or dilution from divestiture transactions
Navigate deal structuring, negotiation, and execution processes
Communicate effectively with stakeholders and investors
Manage compliance and regulatory challenges during divestitures
Appreciate the role of divestitures in corporate portfolio management and value creation
Develop critical thinking and decision-making skills under transaction uncertainty

How the Divestiture Simulation Works

This simulation can be run individually or in teams in academic or corporate contexts. Each cycle represents a stage of getting through a pressing financial situation.

1. Receive Scenario Participants receive a brief outlining the business unit targeted for divestiture along with financial and market data.

2. Analyze the Business Examine segment financials, market positioning, and strategic fit with the parent company.

3. Prepare Financials Separate the divested unit’s revenues, costs, assets, and liabilities to create standalone financial statements.

4. Model Pro Forma Impact Build financial models to project the effects of divestiture on the parent company’s financials and market valuation.

5. Structuring and Negotiation Design deal terms, evaluate buyers, and simulate negotiation scenarios.

6. Execute and Communicate Complete the transaction simulation and prepare performance updates for investors and stakeholders.

7. Review and Reflect Assess outcomes, measure financial and strategic impacts, and refine approaches in successive rounds.

Frequently Asked Questions

What prior knowledge do participants need? Basic understanding of corporate finance concepts such as valuation, financial modeling, and deal structuring is helpful but not mandatory. The simulation includes instructional content for all skill levels.
How long does the simulation typically run? The simulation can be conducted in 3-6 hours depending on the depth of scenarios and customization. It can be delivered as a single session or multiple modules.
Is this simulation individual or team-based? The simulation supports both formats but is designed to reflect real-world team dynamics including roles like divestiture lead, financial analyst, legal advisor, and investor relations.
Are real-world data or scenarios used? Yes, participants work with simulated data and market conditions modeled on historical and current financial markets for realism.
Can instructors customize the simulation content? Absolutely. The scenarios, industry sectors, deal complexity, and learning objectives can be tailored to match course requirements or corporate training goals.
What assessment methods are included? Participants can be evaluated on deal structuring quality, financial analysis accuracy, negotiation and communication effectiveness, and teamwork. Debrief presentations and written memos may also be part of assessment. Assessment methods are very flexible and can be adjusted to suit your specific needs.

Assessment

Assessment of participant performance can be tailored according to the host institution’s objectives (business school, corporate training, assessment centre). Typical assessment criteria include:

Ability to identify and justify the divestiture target based on strategic fit and long-term corporate goals.
Proficiency in valuing assets or business units, including modeling accretion/dilution and pro forma financial statements post-divestiture.
Effectiveness in structuring the divestiture transaction, including deal terms, legal considerations, and negotiation skills.
Understanding and managing regulatory requirements and compliance issues inherent to divestitures.
Capability to plan and implement operational and financial independence of the divested entity.
Evaluation of risks involved in the divestiture and the impact on the remaining business and stakeholders.
Effectiveness in communicating divestiture rationale, progress, and outcomes to investors, executives, and other stakeholders.
Responsiveness to evolving market conditions, investor demands, and unforeseen challenges during the divestiture process.
Ability to work collaboratively in assigned roles reflecting real-world divestiture teams.
Analytical skills in reviewing divestiture outcomes versus objectives and applying lessons learned

Assessment may incorporate peer and self-review components, facilitator scoring, and debrief discussion. Results may feed into grades, executive feedback, certification or development plans.