Carve-outs are becoming more prominent as a way for corporates to unlock value from their non-core enterprises, currently accounting for 10 per cent of all M&A activity globally.

Almost 20 per cent of FTSE 100 companies, with a market cap exceeding £453 billion, have issued profit warnings in 2016, making them ripe for restructure and divestment, In the UK, from analysis undertaken by Baker McKenzie.

Doubled since 2009 

The proportion of carve-out deals, where the buyer is a financial institution (such as a PE investor) has more than doubled since 2009 rising from 10 per cent that year to 23 per cent in 2016.

In total, 90 of the largest carve-out deals between 2012-2016 involved 50 or more jurisdictions. 2009-2014 saw an increase in divestments by US firms. 

However, last year saw a dip in the number but an increase in percentage terms of deals in the Middle East, Africa and Latin America, reflecting increased restructuring in those geographies.

On the rise

The general trend is towards an increasing number of carve-outs as a percentage of all divestments, as particularly seen in the consumer, EMI, pharma, industrials and materials sectors, the report revealed.

Tim Gee, London M&A partner, Baker McKenzie said: "Post the financial crisis carve-outs have become increasingly more common as large companies reassess their businesses, letting go of non-core units to focus on activities key to their strategy.

"With careful planning, carve-outs are seen by global businesses as a preferred route to unlocking value.  For them to be a success, you need a deep understanding of local law, competition and tax requirements in multiple jurisdictions globally."