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Fixed asset toolkit: Assets held for sale · PwC's accounting podcast

• 0:01
  SPEAKER_01: Leadership from PWC.
• 0:07
  SPEAKER_02: Welcome to PWC's The County Podcast.
• 0:10
  SPEAKER_02: I'm Heather Horn.
• 0:12
  SPEAKER_02: Thanks for tuning in to another episode in our Toolkit series, where we're taking a deep dive each month into a single topic.
• 0:19
  SPEAKER_02: Recapping the basics, but also focusing in on frequently asked questions in judgmental areas.
• 0:26
  SPEAKER_02: This month was all about success.
• 0:30
  SPEAKER_00: I think as in many areas where we deal with judgment, so we want to make sure that you have the proper communication and documentation.
• 0:39
  SPEAKER_02: Radomica Lucy, a partner in the national office.
• 0:43
  SPEAKER_02: The current macroeconomic environment continues to put pressure on a company's profile.
• 0:48
  SPEAKER_02: And Redo is here to take you through the key judgments involved in assessing the health for sale criteria and all the ensuing complexities in accounting and reporting for health-for-sale assets.
• 1:00
  SPEAKER_02: There's a lot to cover, so let's get started.
• 1:08
  SPEAKER_02: So, welcome right into this month's podcast series.
• 1:12
  SPEAKER_02: And as our listeners know, this month is all about fixed asset accounting.
• 1:16
  SPEAKER_02: And today specifically, we're going to be covering assets held for sale.
• 1:21
  SPEAKER_02: And I know this is something that you know often comes up when companies are looking at potentially divesting.
• 1:28
  SPEAKER_02: But why would we be talking about this topic right now?
• 1:32
  SPEAKER_00: Thank you, Heather.
• 1:33
  SPEAKER_00: Happy to be here.
• 1:34
  SPEAKER_00: Generally speaking, divesting of assets or businesses is just a natural part of the life cycle of a business.
• 1:39
  SPEAKER_00: However, if you think currently with all the disruptions we have in the marketplace, for example, you know, uh companies are trying to divest their Russian operations, stakeholder pressures around ESG, inflationary pressures, which may cause companies to consider which basis they want to be in.
• 1:54
  SPEAKER_00: So we see more reassessments of portfolios and there with an additional disposal activities.
• 2:00
  SPEAKER_02: All right.
• 2:00
  SPEAKER_02: And then I know one thing that alcohols maybe a myth is that people often think, okay, as soon as you know, I think I have assets held for sale, I have assets held for sale, and it's kind of almost um like it's an arbitrary thing, but I know that's not the case.
• 2:16
  SPEAKER_02: So how do you determine if you meet that criteria?
• 2:20
  SPEAKER_00: Yeah, we have to differentiate two different scenarios.
• 2:23
  SPEAKER_00: One is no the disposal is expected to be by sale or a disposal by other means, spin-off abondament, and things like that.
• 2:30
  SPEAKER_00: And usually we focus on the first one, disposal by sale, where GAP actually has six specific criteria that all have to be met to meet asset help for sale.
• 2:38
  SPEAKER_02: So um we'll talk about the other criteria shortly, but first let's level set on some of the other models.
• 2:45
  SPEAKER_02: You just made a point that we need to differentiate between disposals by sale and other disposals.
• 2:52
  SPEAKER_02: So, what other types of disposals are you talking about?
• 2:55
  SPEAKER_02: And are the help for sale criteria only for disposals by sale?
• 3:00
  SPEAKER_00: Yeah, correct.
• 3:01
  SPEAKER_00: There are two different two additional models.
• 3:03
  SPEAKER_00: One is if you have a disposal by order and sale, so spin-offs, abandonment, these kind of transactions, there you don't look at those six criteria.
• 3:12
  SPEAKER_00: Uh GAAP would not allow you to classify those assets as help for sale until you actually dispose of.
• 3:18
  SPEAKER_00: So the time when you lose control of those assets, you take them off your balance sheet, and then for like discontinued operations and so forth USS at that point, but you could not meet uh asset help for sale for those because they are not by sale, and hence will not meet the criteria.
• 3:34
  SPEAKER_00: And then the other model that I want to just refer to is if the assets that are uh to be disposed of have just recently been acquired.
• 3:41
  SPEAKER_00: So for example, the company acquires a large organization but is only interesting in part of it, and at the acquisition date is expecting to sell part of the just acquired assets.
• 3:51
  SPEAKER_00: In those cases, only the criteria of probable of disposal within 12 months has to be met at the acquisition date to be asset help for sale at such acquisition date.
• 4:00
  SPEAKER_00: The other five criteria can be met within you know a short period of time, typically three months after the acquisition.
• 4:07
  SPEAKER_02: Okay, so Rada, let me recap.
• 4:09
  SPEAKER_02: Basically, we have three models: assets held for sale, assets to be disposed of by abandonment or spinoff or the like, and assets recently acquired that the company intends to sell.
• 4:23
  SPEAKER_02: All of that said, the subject of today's podcast are the assets held for sale criteria.
• 4:29
  SPEAKER_02: So let's turn back to those.
• 4:31
  SPEAKER_02: What's the first criteria?
• 4:33
  SPEAKER_00: First is management of the appropriate authority has committed to a plan of divestiture.
• 4:39
  SPEAKER_00: Depends on the size of the divestiture, internal policies.
• 4:41
  SPEAKER_00: That might be just some level of management within the company.
• 4:44
  SPEAKER_00: It may be the board, uh depending on the internal, you know, approval rights and so forth.
• 4:50
  SPEAKER_00: The second is the asset or the business has to be uh in the available for immediate sale in the current form, so no significant remediations, for example, or that you need those assets to fulfill some other obligations, maybe on a customer contract or somewhere else.
• 5:05
  SPEAKER_00: Thirdly, you have to have initiated an active program to find a buyer.
• 5:09
  SPEAKER_00: You don't have to have found a buyer yet, but you have to have to initiate marketing the asset.
• 5:15
  SPEAKER_00: And fourth, it is probable, obviously, that the asset sales or that the disposal is going to occur and it's gonna happen within 12 months.
• 5:24
  SPEAKER_00: Fifth, uh similar to that, you have to have initiated, you know, finding a buyer, you just have to have actively marketed at a reasonable price.
• 5:32
  SPEAKER_00: So what management believes you know is approximating fair value, so you expect to find a buyer at that price.
• 5:38
  SPEAKER_00: And then sixth and last is you know that the plan is committed to is not expected to be subject to significant changes.
• 5:45
  SPEAKER_00: And sometimes that can be difficult.
• 5:47
  SPEAKER_00: For example, if a company expects to sell three product lines, uh it but doesn't know if it's gonna be one buyer or three buyers, while it may be probably gonna dispose of those, but that plan is still subject to significant changes.
• 6:00
  SPEAKER_00: One versus three is quite a different transaction.
• 6:02
  SPEAKER_00: And so in that situation, you would not have met the asset at the sale.
• 6:06
  SPEAKER_02: So just a couple uh clarifying questions on a few of the criteria you mentioned.
• 6:10
  SPEAKER_02: So one of the ones I know that trips up people in practice is when we say management having the authority to prove the actions.
• 6:18
  SPEAKER_02: And I think sometimes it's very straightforward, especially if the board's involved.
• 6:22
  SPEAKER_02: There's there's no one else.
• 6:23
  SPEAKER_02: But in other cases, you know, if it's just potentially a member of management, what type of judgment can be involved in that?
• 6:32
  SPEAKER_00: Yeah, uh often, you know, we look to the internal policy, uh, delegate at the internal delegation policies, uh, what's the size of the transaction?
• 6:39
  SPEAKER_00: And often uh if you have significant transactions, you have uh explicitly stipulated in decision making.
• 6:47
  SPEAKER_00: So the board may say, you manage me, you're authorized to go negotiate, but you have final say before you actually sign the agreement, things like that.
• 6:55
  SPEAKER_00: Uh would we see more uh judgment around this often that 12-month window?
• 6:59
  SPEAKER_00: Is the disposal probable within 12 months?
• 7:02
  SPEAKER_00: And there, you know, management really has to consider all circle all facts and circumstances.
• 7:08
  SPEAKER_00: For example, have you passed history similar transactions?
• 7:11
  SPEAKER_00: What's the industry they're in?
• 7:12
  SPEAKER_00: What's the regulatory environment?
• 7:14
  SPEAKER_00: Does the buyer need financing?
• 7:15
  SPEAKER_00: How difficult might that be obtain?
• 7:17
  SPEAKER_00: Think about right now where some of the debt markets may freeze up a little bit, that could affect that assessment.
• 7:23
  SPEAKER_00: Um, and so there might be circumstances where it's appropriate to conclude, you know, we have asked help for sale when you start marketing it, even before you have talked to a buyer, other circumstances it might not be help uh probable until you actually have a signed agreement.
• 7:37
  SPEAKER_00: So management really should consider all the facts and circumstances.
• 7:42
  SPEAKER_02: So um I also know that there is sometimes an exception to the 12-month rule.
• 7:47
  SPEAKER_02: And so when would that come into play?
• 7:49
  SPEAKER_00: Yes, correct Heather.
• 7:50
  SPEAKER_00: There is a circumstance that uh if management at the time they committed the plan expect that somebody other than the buyer would impose conditions on the transaction.
• 7:59
  SPEAKER_00: So, for example, a regulatory body may come in and say you have to dispose of a certain part of the assets uh to somebody else, not that buyer, uh, but you cannot initiate the actions to meet those conditions before you have a firm purchase commitment, then you can meet asset help for sale with an expected window of more than 12 months.
• 8:19
  SPEAKER_00: If you expect to obtain a firm purchase commitment from a buyer within 12 months.
• 8:24
  SPEAKER_02: Maybe an example of that would be as our frequent listeners know, I'm from the power and utilities industry, and often there is regulatory approval required.
• 8:33
  SPEAKER_02: So I think the point you're making here is that if I meet all the other criteria, and you know, I also have and I expect to be able to sign the purchase commitment within a year, but then I know the regulator is going to come in and they may have some additional requirements, that would not preclude me from meeting the help for sale criteria.
• 8:54
  SPEAKER_00: Correct.
• 8:55
  SPEAKER_02: Okay, that's helpful.
• 8:56
  SPEAKER_02: So then I think the other question I know we frequently get is whether or not the criteria are all weighted the same, or whether some are more or less important.
• 9:07
  SPEAKER_00: No, why they're not necessarily weighted, all of them have to be met.
• 9:10
  SPEAKER_00: But we talked already, some of them might be a bit more judgmental if they have to be met or not.
• 9:15
  SPEAKER_00: Um and also important to note that if, let's say, you have four or five criteria of the balance sheet date and one final criteria met after the balance sheet date, but before you issue your financial statements, you would not go back and reflect asset help for sale at that balance sheet date.
• 9:30
  SPEAKER_00: So it's a so-called type 2, unadjusting subsequent event.
• 9:34
  SPEAKER_00: You may have disclosures around it in a subsequent event footnote, but you would not adjust your balance sheet.
• 9:40
  SPEAKER_02: All right, but so what if uh you know you are past the 12-month period and it's not a look back question, but now there is a question of whether you're going to complete it within the next 12 months.
• 9:51
  SPEAKER_02: Do you move things out of held for sale?
• 9:54
  SPEAKER_00: Uh it's possible.
• 9:55
  SPEAKER_00: You know, we're talking about probabilities here.
• 9:57
  SPEAKER_00: So we use some words like unlikely, probable, and so forth.
• 10:00
  SPEAKER_00: So subsequent changes in the judgment can happen.
• 10:02
  SPEAKER_00: Uh that might be appropriate.
• 10:04
  SPEAKER_00: And there are scenarios where you may not have to uh pull it out of asset help for sale.
• 10:09
  SPEAKER_00: Uh so for example, if after you have obtained the firm purchase commitment and now somebody, maybe even a buyer, puts conditions on the transactions.
• 10:18
  SPEAKER_00: And you know, as long as you initiate the necessary actions timely and you expect that these conditions can be favorably met, you can keep an asset help for sale at that scenario.
• 10:28
  SPEAKER_02: Okay.
• 10:29
  SPEAKER_02: Um, so we've talked about now when a disposal group represents um an asset help for sale.
• 10:36
  SPEAKER_02: How is this presented on the balance sheet then?
• 10:39
  SPEAKER_00: Yeah, so the the most important part is you segregate it on the balance sheet, as you say, uh in a separate line item, asset or liable help for sale.
• 10:47
  SPEAKER_00: And typically you stay within your current long-term uh category.
• 10:52
  SPEAKER_00: There can be situations where let's say you sell uh assets that include some long-term uh assets and you sell them for cash that you're not expecting to use to settle long-term debt.
• 11:03
  SPEAKER_00: In that scenario, because you expect now to realize that long-term asset in less than 12 months, you can actually uh flip it up into the current assets.
• 11:12
  SPEAKER_02: And then anything other than balance sheet classification that we should be thinking about?
• 11:17
  SPEAKER_00: Yep.
• 11:18
  SPEAKER_00: Before we go to the other aspects, also think about the comparative balance sheet.
• 11:22
  SPEAKER_00: So uh the pre-I year balance sheet, uh, to the extent that the transaction qualifies as a discontinued operation, uh, you're required to reclassify the assets also in the comparative balance sheet uh to asset help for sale.
• 11:35
  SPEAKER_00: To the extent it is not this GOPS, uh it's optional, you're allowed to, but then you're not required.
• 11:41
  SPEAKER_02: And then how about just more broadly from an accounting perspective?
• 11:45
  SPEAKER_00: Yeah, so asset help for sale essentially have their own measurement recognition model.
• 11:49
  SPEAKER_00: First, you stop depreciate and amortize and your finite lift assets.
• 11:54
  SPEAKER_00: Now expect them to sell, and so you no longer uh incur depreciation for them.
• 11:58
  SPEAKER_00: Yeah, and then when you reclassify them to asset help for sale, you also measure them at the lower of their carrying value or fair value as cost to sell.
• 12:06
  SPEAKER_00: So you may have to write them down uh at that point.
• 12:09
  SPEAKER_00: And in subsequent periods, you know, you monitor that to the extent that fair value changes, you may have additional write downs that fair value decreases, or the fair value as cost to sell may increase, at which point you're actually allowed to write your asset back up.
• 12:23
  SPEAKER_00: But obviously your write-up cannot exceed what you previously voted.
• 12:28
  SPEAKER_02: All right, definitely something to keep in mind then.
• 12:30
  SPEAKER_02: And then what are some of the things to consider when you're thinking about that lower of uh measurement?
• 12:36
  SPEAKER_00: Yeah, there can be quite some complexities.
• 12:38
  SPEAKER_02: On that point, I know one of the complexities, the order of impairment testing, which is modified in an assets held for sales scenario.
• 12:46
  SPEAKER_02: What can you share with us about that?
• 12:48
  SPEAKER_00: You have a modified ordering of impairment testing.
• 12:51
  SPEAKER_00: So if you think about, you know, you have these various assets in your balance sheet.
• 12:54
  SPEAKER_00: You start with the current assets, your CESL, your inventory, then the indefinite lift intangibles, then goodwill that's allocated to the disposal group, and only then are you measuring that fair value less cost to sell.
• 13:05
  SPEAKER_00: So you flip the order of goodwill and AC360 finite asset impairment test, essentially, when you have asset help for sale.
• 13:12
  SPEAKER_02: Okay.
• 13:13
  SPEAKER_02: I know another complexity that we look at in the lower of measurement has to do with CTA, so the currency translation adjustment.
• 13:20
  SPEAKER_02: This would be in the case that you have a disposal group that's a foreign entity.
• 13:25
  SPEAKER_00: Another one is uh auto-comprehensive income.
• 13:28
  SPEAKER_00: So to the extent that you have CTA and other things attributable to the disposal group, you don't reclassify it, you leave it in equity, and obviously you don't release it until disposal occurs, but you include it in the carrying amount uh of your disposal group.
• 13:42
  SPEAKER_02: Okay, so now let's move on to unit of account.
• 13:46
  SPEAKER_02: This comes into play when the loss exceeds the carrying amount of the disposal group.
• 13:51
  SPEAKER_00: Another one often that we encounter is so-called question of what's actually the unit of account.
• 13:55
  SPEAKER_00: It's probably easiest if I use a numerical example for that.
• 13:59
  SPEAKER_00: Say you have a disposal group carrying amount of 100, it's fair value less cost of sales 75.
• 14:05
  SPEAKER_00: So you would expect a write down of 25.
• 14:08
  SPEAKER_00: However, the finite lift assets within that disposal group have a carrying amount of 20 and only a fair value of five.
• 14:14
  SPEAKER_00: So that's only a write down of 15.
• 14:16
  SPEAKER_00: And so the question is now what does ASE360 really require?
• 14:19
  SPEAKER_00: Write down of 15 or a write down of 25?
• 14:22
  SPEAKER_00: And because there's no clear guidance, the profession essentially accepts an accounting policy election here.
• 14:27
  SPEAKER_00: You can either say the focus on the finite lift assets, I only incur a write down of 15 in that situation, and then later on in the disposal it at a value of 75, I have another value another expense of 10 down the road.
• 14:42
  SPEAKER_00: Or I say, no, the unit of accounts will be the disposal group, I write down the finite lift assets to their fair value of five, and then the additional loss is recognized by means of evaluation allowance.
• 14:56
  SPEAKER_02: Okay, that's definitely a lot to think about.
• 14:59
  SPEAKER_02: And I know that's covered further in our PPE guide, chapter five, including the example you just gave.
• 15:05
  SPEAKER_02: So then let's turn to our last complexity, deferred taxes.
• 15:10
  SPEAKER_00: How are deferred taxes figuring to that carrying value of the disposal group?
• 15:14
  SPEAKER_00: And there depends on the structure of the expected transaction.
• 15:18
  SPEAKER_00: To the extent I expect to sell the stock of a subsidiary.
• 15:22
  SPEAKER_00: Typically, your temporary differences, your tax attribute will transfer over to the buyer, and therewith the deferred taxes associated with those uh temporary differences will also transfer.
• 15:32
  SPEAKER_00: And so including those balances in the disposal group and its respective carrying it on.
• 15:38
  SPEAKER_00: On the other side, if you expect to dispose of assets in an asset deal, the temporary differences would reverse.
• 15:45
  SPEAKER_00: And those deferred taxes would reverse as part of the sellers books and not transfer, in those cases, deferred taxes would not be part of the disposal group and not reclassify the asset out for sale.
• 15:56
  SPEAKER_02: All right.
• 15:57
  SPEAKER_02: And then I know one of the other areas where we can have some complexity is in cost to sell.
• 16:03
  SPEAKER_02: So what do you typically think about when you're considering that?
• 16:07
  SPEAKER_00: Yes, so fair value and less cost of sell is uh clearly just the incremental direct cost.
• 16:12
  SPEAKER_00: The gap is pretty clear there.
• 16:13
  SPEAKER_00: It's those, you know, broker commission, legal fees, and things like that.
• 16:17
  SPEAKER_00: Uh what the authoritative literature explicitly addresses is things like future operating losses.
• 16:23
  SPEAKER_00: So you cannot include those.
• 16:25
  SPEAKER_00: Or you think about employee-related costs, I have to prepare car from financials, I have stay bonus, and so things like that are not incremental direct costs, all but associated with the transaction, but they are just period costs and should not be included in that measurement.
• 16:41
  SPEAKER_00: And to the extent of disposal expected by more than 12 months, you would also discount those costs in the fairwell on this cost of sell.
• 16:48
  SPEAKER_02: So, Raya, let's move back to something you said earlier.
• 16:52
  SPEAKER_02: I was reflecting on the question I asked you about the case of what could happen if you have circumstances changed such that you fell out of held for sale.
• 17:02
  SPEAKER_02: And you mentioned that it is unusual, but it can happen.
• 17:05
  SPEAKER_02: So I'd like to delve a little bit more into that so we can understand what would trigger those circumstances, and then what would you do?
• 17:12
  SPEAKER_02: So maybe first we can talk about the circumstances that would not result in reclassification out of held for sale, and then let's look at the circumstances that you would uh require reclassification.
• 17:24
  SPEAKER_00: Correct.
• 17:25
  SPEAKER_00: So we talked about, you know, where you could extend the window of the 12 months if things happen subsequently.
• 17:31
  SPEAKER_00: Also failed to mention there.
• 17:33
  SPEAKER_00: Um there could also be other situations.
• 17:35
  SPEAKER_00: So if there are unlikely events occurring within that 12-month uh window that we did not expect to happen, that are now extending our expectation disposal, and we timely take action to address those circumstances, uh, we continue to market the asset and we expect eventually to meet, uh we achieve the disposal, then we essentially have a reassessment, we consider those, uh if they're unlikely, we're pursuing the necessary actions, and so we can extend that 12-month window.
• 18:03
  SPEAKER_00: And obviously, the more we do that, the more often we do that, the more you know pressure it's gonna build on the judgment, but it it's feasible.
• 18:10
  SPEAKER_00: Now, there are other circumstances where let's say I don't no longer have I don't no longer know how I'm gonna dispose of something, or I identified you know significant remediation efforts, and so the asset is no longer available in its current form, or there are other scenarios where I realized that the the price I already thought is reasonable is just not market relevant, and um so at this point I'm not marking it at the appropriate price, and I meet one of I don't meet one of those other criteria anymore, and hence no longer qualify for asset help for sale, I have to reclassify it back in asset help for use.
• 18:46
  SPEAKER_02: Okay, wait, that's important to note because that results in reclassification out of help for sale.
• 18:52
  SPEAKER_02: What else goes along with that reclassification?
• 18:55
  SPEAKER_00: You recognize now these assets at the lower of fair value, or original carrying amount, you know, plus additional depreciation that I should have recognized had they always been asset help for use.
• 19:08
  SPEAKER_00: And so in those situations, you typically have an immediate an immediate PL effect.
• 19:13
  SPEAKER_00: If you previously did not write them down, so you kept them at a carrying amount, you just stopped depreciating.
• 19:19
  SPEAKER_00: Now you have a cumulative catch-up.
• 19:21
  SPEAKER_00: You have to recognize that additional depreciation at the time when you reclassify them to asset help for use, or you may have written them down to lower into the lower fair value, less cost of sale, and now you recognize them at fair value.
• 19:35
  SPEAKER_00: Essentially means you write them up a bit because the costs are no longer a relevant factor in the measurement.
• 19:42
  SPEAKER_00: Might not be a lot, but at least it's it's a write-up, it's a write-up from the less cost of sale up to full fair value.
• 19:49
  SPEAKER_02: Okay, that's helpful.
• 19:50
  SPEAKER_02: So a couple of wrap-up questions then.
• 19:52
  SPEAKER_02: I know that you've helped a lot of companies and engagement teams work through these issues and definitely can be very judgmental and a lot to think about.
• 20:01
  SPEAKER_02: From your perspective, what's some advice that you would give in terms of, you know, if you're going to be dealing with one of these, uh, what advice would you give to a company?
• 20:13
  SPEAKER_00: I think as in many areas where we deal with, you know, judgments and so, you want to make sure you have the proper communication and documentation.
• 20:20
  SPEAKER_00: And with communication, I mean between the different groups in the organization, that the finance organization is fully involved and understands from the BISDEF or from senior management what are we actually going to do here?
• 20:31
  SPEAKER_00: What's the intention, what's the timeline, and so forth.
• 20:34
  SPEAKER_00: Um, so we have all the necessary information to make those judgments, document it timely contemporaneously.
• 20:40
  SPEAKER_00: What were the circumstances we assessed?
• 20:42
  SPEAKER_00: What did we think about may or may not happen in the future?
• 20:45
  SPEAKER_00: Why do we believe we met those six criteria?
• 20:47
  SPEAKER_00: So that if subsequently something changes, I can point back and say, you know, I thought about it, I documented it, there were new things arising that were reasonably not considered.
• 20:57
  SPEAKER_00: When we did uh have asset help for sale, and then you know, have the appropriate processes in place to actually monitor sometimes, as you said, in your utility space, it can take a long time until a transaction closes.
• 21:08
  SPEAKER_00: So, how do I, in a finance and accounting function, understand what's happening out there?
• 21:12
  SPEAKER_00: You know, I'm gonna get timely informed about communication with author with the regulatory authorities and so forth to continue and reassess uh those circumstances.
• 21:22
  SPEAKER_00: Often also from the tactical perspective, uh people should not underestimate the data needs.
• 21:27
  SPEAKER_00: If it's discontinued operations and you have to go back and you have to uh reclassify it your historical balance sheet or you know, in your PL reclassify discontinued operation, you may have to prepare carve up financial statements, steal financial statements and so forth.
• 21:41
  SPEAKER_00: There's a lot of effort that can go in, uh which again goes back to communication.
• 21:45
  SPEAKER_00: You cannot just drop that on the finance team in the last minute, you have to involve them early on.
• 21:50
  SPEAKER_02: All right, definitely great advice, I think, to your point to any transaction, but definitely if you're dealing with one of these situations.
• 21:56
  SPEAKER_02: And then where should people go if they have more questions?
• 22:00
  SPEAKER_00: Yeah, so the uh our PPE guide uh includes a significant discussion around that uh in chapter five, uh, around you know, how do when do you meet those criteria, how to classify, how to measure them and so forth.
• 22:14
  SPEAKER_02: Perfect.
• 22:14
  SPEAKER_02: All right, so now for the fun part.
• 22:16
  SPEAKER_02: I think you'll remember this from last time we were on.
• 22:18
  SPEAKER_02: We always wrap up with Stump the Gas.
• 22:20
  SPEAKER_02: It looks like the producers were particularly nice to you today, because only one question, and it's multiple choice.
• 22:27
  SPEAKER_02: So good chance to bat um a thousand percent.
• 22:31
  SPEAKER_02: What percent of sellers experience higher EBITDA growth after a divestiture?
• 22:37
  SPEAKER_02: 20%, 35%, 60%, or 85%?
• 22:43
  SPEAKER_00: Typically, we're selling, you know, underperforming.
• 22:46
  SPEAKER_00: So I'm gonna say 60%.
• 22:49
  SPEAKER_02: All right.
• 22:49
  SPEAKER_02: It's like I gave you the answers.
• 22:51
  SPEAKER_02: So it is 60%, and I love your logic.
• 22:54
  SPEAKER_02: Um, so 60% of sellers experience higher EBITDEC growth in the years falling into vestiture, and uh the producers added a little commentary here that the right deal can help you keep ahead of the competition, creating sustainable value long after close.
• 23:10
  SPEAKER_02: So, kind of going with your point that often maybe you're divesting an underperformer, and so your your whole company will be stronger.
• 23:17
  SPEAKER_02: So, Rita, such a pleasure to have you on.
• 23:20
  SPEAKER_02: Thanks so much for joining me today.
• 23:22
  SPEAKER_02: That's our show for today.
• 23:24
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• 23:27
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• 23:50
  SPEAKER_02: From thought leadership at PWC, I'm Heather Horse.
• 23:54
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