We estimate from our research that, far from being worth more than the sum of their parts, well over half the world’s multibusiness companies are actually worth less than this. They are value destroyers. The lack of clear corporate-level strategies shows up in the portfolios of unhappy bedfellows, well-intentioned but damaging corporate initiatives, and strings of acquisitions that create more wealth for bankers, lawyers and advisers than for closer stakeholders in the company. The cost of this gap in corporate strategy is the suppression of billions of dollars of value, which is sporadically released by MBOs, unusually powerful shareholders, or the threat of enforced break-up. In contrast, some multibusiness companies create significant value from sound corporate-level strategies.
Our approach to corporate-level strategy, based on 10 years of research with multibusiness companies in Europe, North America, and Asia, adopts a bottom-up view of the corporation, emphasizes the danger of value destruction and the necessity of “fit” between businesses and their parent company, and places at center stage the concept of “parenting advantage.”
Editor’s Note: offers a nice illustration of the Ashridge “Fit” Matrix
Authors: Andrew Campbell, Marcus Alexander, Michael Goold
Source: Prism (Arthur D. Little)
Subject: Strategy
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