December 12, 2011
Spin-Offs: A New Approach to Corporate Growth
in this “Mergercast,” J. Neely of Booz & Co. talks about a new approach to corporate growth that looks likely to remain a strong trend in 2012. Here is a teaser about the program:
“A number of industries have gone through substantial portfolio realignment in 2011, grouping together similar business lines by spinning off those that don’t align with them closely. This has been especially useful for very large corporations as they re-evaluate their strengths, enabling them to put more focus behind lines of business that have the strongest synergy,” Neely says.
He adds, “One prominent example is Kraft, for whom the costs of managing an extremely diverse set of businesses proved greater than the benefits of running them together. However, spinning off two separate entities focusing, respectively, on grocery products and snacks foods, allowed their distinct capabilities systems to be leveraged individually, which was beneficial for driving the growth of each new organization.”
Neely also looks at Sara Lee, Fortune Brands, McGraw Hill and Hewlett Packard, as well as the strong likelihood that the spinoff trend will continue into 2012.