How fast-growing AMT businesses are harnessing the power of divestments

Our survey reveals that AMT firms are keen to raise funds via careful portfolio management

As fast-growing AMT businesses plot their next stage of growth, planning a funding strategy is vital. Our survey suggests that debt remains attractive to many in the sector; no doubt many firms are tempted by this form of finance in a low interest-rate environment.

Significantly, however, the number of fast-growing AMT businesses set to fund growth from the proceeds of non-core disposals is rocketing. When choosing all that apply, 42% of AMT respondents say that they will fund growth via reinvestment of funds from non-core disposals (up from 17% in the past three years and compared with only 23% of those in all sectors). When asked to choose the most important method of funding, reinvestment from divestment is set to increase five-fold, from just 4% over the past three years to 20% over the three years to come.

This reflects several factors. In the process of consolidation, many businesses have taken on assets they do not actively require as part of bigger deals and are now seeking to divest them. Equally, fast-growing companies recognise the need for careful portfolio management: divesting their weaker business units ensures they can direct capital towards the areas of operation that are really driving their growth.

It may also be the case that some companies have taken a scattergun approach to acquiring new technologies and capability, making many small bets on different types of innovation; now they are looking to sell those investments that have proved less productive.