Often, in order to maintain or create efficiencies, a business has to assess opportunities to consolidate its fixed costs. This can be true for a number of reasons:

• Your company may be struggling with profit and loss. 
• Your company may be facing increased competition in its marketplace, requiring more efficient production.
• Sometimes if a firm has separate operations, you do things differently at each site.
• Or maybe in the past, your company acquired three different operations and each has operated in a different way.
  

For whatever reason, you've ended up with processes and procedures that are inconsistent between operations.

So if you are trying to modernize your operation, you may well reach a point where you need to get more efficient and you need to get more consistent. 

Your problem may be that you need to enhance the competitive advantage of your business. You may have parts of your business that are just holding on, and other parts of your business that are in decline. So if you have any hopes of growing, you have to find a new area of business that will allow your company to get on a growth curve. 

Or you may want to grow your company, and you need to determine how best to do that.

Do you do it on a gradual basis and build it over time or do you go out and buy some technology or some assets that will allow you to do it more quickly?

Again, your company may be facing a problem of gaining competitive advantage. Either you’re doing well and you want to grow or you’re facing an issue where if you don’t do something your business is going to sink. 

In either case, the question is, are you going to try to grow by expanding into a new geographic area?

You may want to diversify and take advantage of the synergies that can be created by acquiring another company's operation.

Or it may be that you have a good business but it has one or two weaknesses and those gaps could be filled by acquiring another business. The situation might be the case where one plus one equals three.

Or, It could be a case where both businesses can benefit each other: You're going to buy this business and it's going to help your existing business not only with efficiencies but in its reach in the marketplace and vice versa. So you're not adding an exact replica of your current business, but a complementary business.

Your company could be facing a number of situations that justify considering divestiture:

• You did a merger and need to divest part of the business you acquired.
  
• The focus of part of your business is in an area where the market isn't growing.
  
• The focus of part of your business is in an area where you're not able to compete or you don’t want to compete.
  
• The focus of part of your business is not on your core competency.  
  
• Technological advances in your industry mean your company is not able to compete effectively in a certain business line. 
  
• You’ve lost your strategic advantage in one product line or you never had one and it’s bleeding your company.
  
• You're losing money on a certain product line and you’ve got to get rid of it because the sooner you get rid of it the better off you're company is going to be.
  

These are all reasons why you might decide to divest part of your business.

A key problem affecting a decision to sell a company is that many business founders or owners lack a succession plan. They may wish to see the company continue, but there is no plan in place to keep it operating independently.

Another problem that arises is the inability to continue to manage. You may no longer have the energy of the skills to continue to run your business. You want to retire, or your workforce is retiring and you have a real problem in terms of keeping relevant and up to date in the marketplace.  

This decision is driven by the need to focus on your company's core competency.

You want to concentrate on what you can do best, not on the parts of your business for which you provide the overhead but which perform work that can be done more efficiently and effectively by organizations who have expertise in that area.