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Demerging a High Street Conglomerate

We were hired by the Burton Group to help with aspects of the company’s demerger of Debenhams, that simultaneously merged and created Arcadia Group from the remaining high street multiples. He was subsequently asked by Financial Times Management to write their best-practice guide Demerging Organisations.

Here is an action summary of the key points to manage and watch out for when managing the organisational and people aspects of a demerger.


Planning the demerger …

  • Consider what management competencies will be needed.
  • Recognise key decisions to be taken.
  • Identify relevant success criteria (both hard and soft) against which to assess the demerger process as it proceeds separately from the eventual outcome.
  • Understand the human resource risks, and how to combat them.
  • Understand the relevance of the culture to demerger success.
  • Plan to track the demerger in real time to inform the progress of the demerger. Capture unfinished business. Generate useful PR and learning material.
  • Understand the dynamics of the process, including the shifting collaboration and competition between component businesses and head office.
  • Let managers know what to expect and what to do.
  • Know how and when to communicate to the various stakeholders.
  • Know how to get value for money from professional advisers.

Looking ahead …

  • What past strengths should the new organisation try to hold onto?
  • What opportunities does the demerger offer to create a different kind of organisation?
  • What head-office ‘parenting style’ will be appropriate for the future business?
  • How should the demerger affect management development programmes?
  • What administrative practices that existed to serve the pre-demerged organisation will need questioning in the context of the new organisation?
  • How will the new organisation avoid recreating the problems that the demerger was intended to solve?
  • What will the organisation learn from the way the demerger process is managed?

For more information on best practice, see Demerging Organisations: A Guide to Best Practice, Financial Times Management.