How to ensure the assets on your balance sheet are working for you

What are non-core assets?

• A non-core asset can be any kind of asset that's not essential to generating revenue and the core business operations of a company.
• A non-core part of the business that is underinvested including lack of senior management attention. 
• A non-core asset could be a factory or property that is no longer being used.
• Non-core assets might also be an entire subsidiary or a holding in another company.

Spotting a non-core asset early will help realise full value rather than when it starts underperforming. Do not let emotions get in the way, divestment should be a strategic tool to focus on the key areas of value in the business. Planning for a sale should typically start at least 6 months before you realise the investment in order to give yourself a good timeframe to achieve the value/result you want. 

How do you find an ideal buyer of a non-core asset?

Does the non-core asset have the potential to stand alone, be used as a platform for a buy and build or have any synergetic potential with any other trades/businesses?

Finding the ideal buyer of a non-core asset can vary depending on where such assets would most likely succeed. Non-core assets can be sold to PE funds, trade and can be acquired by local management by way of a management buyout.  

Depending on the nature of the business a non-core disposal can be more difficult if some of the business (accounts, IP, IT etc) functions are centralised so planning ahead to de-centralise these functions can help achieve a quicker and more successful sale although interim arrangements are often agreed to allow the newly separated business to gradually move across the centralised functions. 

Our second post will look at current assets, especially debtors and stock. 

10 Gateley insights for a resilient balance sheet 

Follow our ten-part series looking at solutions and opportunities for 2021 viewed through the balance sheet.;

Introduction: How to prepare a resilient balance sheet for 2021
Article one: How to ensure the assets on your balance sheet are working for you
Article two: Current assets: separating the ‘can’t pay’ from the ‘won’t pay’ customer
Article three: Short term creditors: how to access funding
Article four: Long term creditors: converting liabilities to equity
Article five: Long term creditors: the benefits of informal creditor arrangements
Article six: Net Assets: what the new restructuring regime means for your business
Article seven: Net Assets: how 'pre-pack administrations' can save your business
Article eight: Net Assets: Advantages and pitfalls of buying insolvent businesses
Article nine: How to unlock capital from inefficient equity structures
Article ten: Shareholder funds: when can a company declare a dividend?