… At the very least, it’s continuing in the corporate world. Two-thirds of respondents to a recent survey by Deloitte indicated that their companies still were doing carve-outs and divestitures, despite the economy.

The most common reason for the break-ups was to jettison assets that weren’t core to the companies’ strategies, which was noted by 66 percent of respondents. About half of the survey-takers said that generating cash was a motive – not surprising, given the economy.

That said, not all attempts at carve-outs are successful. Two-fifths of companies had been unable to complete a divestiture they had attempted within the past three years. Of the reasons the divestitures didn’t go through, the most common, with two-thirds of respondents mentioning it, was an inability to get the price sought – again, not surprising in this economy. Similarly, nearly 40 percent indicated that the potential buyers came back with reduced terms, leading to a breakdown in the deal.

Even so, executives say that they plan to continue ridding their firms of noncore assets in order to focus on their primary business strategies and strengthen their balance sheets. In fact, the number of carve-outs inched up 3 percent between 2007 and 2008.

At the same time, deal sizes are expected to decline; in fact, the average dropped in 2008, the survey noted. This can complicate things for sellers, as smaller deals tend to attract less interest, even though they require roughly the same level of planning and due diligence. Companies that aren’t forced to sell to boost their bank accounts, and can proceed at a measured pace, can use this time to develop a solid plan. By the time valuations improve, they should be ready to go. ###