The product divestment process in M&A transactions is complex to say the least. The divestment of specific products not only requires transferring the market’s responsibility, but also all manufacturing technology, distribution channels and intellectual propriety assets. In addition, further complications arise if two companies have different, and potentially incompatible, forecasting tools and procedures, or if the selling company owns a product in their portfolio that is in direct competition with the product that is being sold.

In this situation, it is important to bear in mind important strategic and operational considerations, such as the partner’s remote access to the system, nondisclosure of data, timing of planning cycles, and the potential to run simulations of future scenarios in an ‘ex-situ’ system. Naturally, the divestment process requires an adequate, shared forecasting/ordering system of the product that includes all these considerations.

Use of Simulation Modelling

The use of simulation modelling can be of great use for these kinds of transactions. Both the production processes of a company, as well as the distribution and selling channels can be modelled on an independent platform that analyzes the existing situation and duplicates the process with step-by-step production logistics. Thanks to this, companies gain access to “Digital Twins”, i.e. perfect replicas of the timing, outputs and possible deviations of the production systems, thus offering an accurate analysis of the existing situation.

Specific Benefits

This system allows for a detailed sales management structure, as well as a conversion of these needs in supply orders. The simulation model gathers both the sales management details and supply order needs in a single platform that complies with the ringfencing needs of every user. In addition, it can model disruptive events both at the production and sales levels, and therefore enables to test the robustness of the whole supply chain.

Industry: Pharmaceutical

To learn more, read our full case study on Business Divestment