PitchBook Analyst Note: PE Rediscovers Divestitures as a Value Creation Strategy

Divestitures rise as PE firms seek value 
 

For nearly a decade, PE investors sought growth over value—a strategy that was rewarded as long as multiples expanded. But higher borrowing costs have capped valuations and sent investors flocking to a strategy long out of vogue: divestitures. 

PE-led acquisitions of corporate divestitures have risen steadily as a share of all buyouts from an all-time low of 5.7% in Q4 2021 to 12.6% in Q1 2024, our latest analyst note explains. Divested assets tend to be cheaper, allowing firms with a clear valuation strategy to win big at a time when financial leverage is less impactful.