Conglomerates break up

Conglomerates break up

Media Coverage

22 November 2021

Leon Perera, Chairman of the Spire Group, shared his thoughts on conglomerates breaking up into smaller, more focused business entities with The Business Times Singapore.

In November 2021, General Electric, Toshiba, and Johnson & Johnson announced their plans to break up into multiple units. While these giants have their reasons for this move, it seems that a new breed of corporate titans, such as big tech companies like Amazon, has emerged.

Is the business model of a huge, diversified conglomerate on its way out? Leon commented that conglomerates breaking up into multiple entities is an investor driven trend. Investors prefer firms to have a defined business model that they can work into their portfolio management processes. This means that conglomerates that are integrated within a single industry space, either through vertical integration or linked adjacent business lines, may still have a future. Leon believes that the key lies in the synergy across the conglomerate’s business lines – whether or not they combine to form a cohesive whole and a compelling narrative.

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