Divestment operations : the strategic, financial and organizational motivations : the case of Mota-Engil

• Autor(a) principal: Santos, Inês Coimbra Ferreira dos
• Data de Publicação: 2019
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositórios Científicos de Acesso Aberto de Portugal (RCAAP)
• Texto Completo: http://hdl.handle.net/10400.14/28389
• topic: Restructuring; Divestment; Crisis; Debt; Invested capital; ROE; EBITDA; Financial constraints; Restruturação; Desinvestimento; Crise; Endividamento; Capital investido; Restrições financeiras

Mota-Engil is a multinational company operating in several areas, mainly in construction, counting on a legacy of more than seventy years. Considered market leader in Portugal, and one of EuropeÕs thirty largest construction groups, this company has been intensively engaged in restructuring operations in recent years, namely in divestment activities. The group revealed that these were related with focus increasing purposes, as well as with the objective of optimizing and strengthen capital structure, and of highlighting and give recognition to the management of each divested unit. Regardless of the great dimension and influence of this construction giant, it has been challenged in recent years by inconvenient economic events, such as the resolution of BES in Portugal, and the severe impact of the world oil prices fall in AfricaÕs and Latin AmericaÕs economies. These events coupled with the economic financial crisis of 2008, entailed a shock in Mota-EngilÕs performance. The conjuncture of the overall situation, raised the need to investigate the sense of these operations beyond the market releases, combining three perspectives: financial, strategic and organizational. This case study implies a deep analysis of financial measures, such as EBITDA, ROE, invested capital and pay-out ratio, combined with a strategic and organizational investigation. The merging of these three strands revealed that the divestments were mostly induced by heavy financial constraints and large debt burden of the group, contrarily to the motives outlined by the company. Due to these financial restrictions, Mota-Engil was facing a paradox: it had to decrease invested capital, which implied exiting some intensive capital businesses, although only in more capital-intensive businesses the group could achieve the outlined EBITDA margin goal of 15%. The conclusion withdrawn from the combination of these three perspectives reveals the divestments were necessary to ease the debt burden and reflect the great management capacity of the group to overcome such unfavourable macroeconomic shocks.