Spinoffs Are Becoming a Valuable Tool for Corporate Growth

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Separating Businesses with Different Capabilities Systems Strengthens Focus and Growth Prospects, According to Latest Episode of Mergercast by Booz & Company

In the current business climate, reshuffling portfolios to concentrate on businesses whose core capabilities systems align enables corporations to leverage resources more efficiently toward higher long-term growth.

Large corporations are seeking new growth strategies through … spinoffs.

In the current business climate, reshuffling portfolios to concentrate on businesses whose core capabilities systems align enables corporations to leverage resources more efficiently toward higher long-term growth, explains J. Neely, a Partner at Booz & Company.

Neely discusses this trend in Episode 38 of Mergercast by Booz & Company titled “Spinoffs.”

“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.

About Mergercast
Mergercast by Booz & Company is a podcast series exploring the world of mergers, acquisitions and restructurings. The current episode, No. 38, has a run time of 14 minutes and 48 seconds. Listeners can play the podcast on its homepage (http://www.booz.com/mergercast) or subscribe via RSS feed, e-mail or the iTunes store.

About Booz & Company
Booz & Company is a leading global management consulting firm, helping the world’s top businesses, governments and organizations. Our founder, Edwin Booz, defined the profession when he established the first management consulting firm in 1914. Today, with more than 3,300 people in 61 offices around the world, we bring foresight and knowledge, deep functional expertise, and a practical approach to building capabilities and delivering real impact. We work closely with our clients to create and deliver essential advantage. The independent White Space report ranked Booz & Company #1 among consulting firms for “the best thought leadership” in 2010.

For our management magazine strategy+business visit http://www.strategy-business.com.

Visit http://www.booz.com to learn more about Booz & Company.

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Sharon Bially
FARRELL KRAMER COMMUNICATIONS, LLC
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