The Rise of Corporate Splits: Why America’s Iconic Companies are Breaking Up

The Rise of Corporate Splits: Why America’s Iconic Companies are Breaking Up

In a surprising turn of events, some of America’s most well-known companies are opting to split up, believing that their businesses will be more valuable apart than together. This movement is challenging the traditional conglomerate model, which was once seen as a way to maximize profits.

The latest company to join the trend is DuPont, which announced its decision to break up into three separate publicly traded companies: Electronics, Water, and Industrial. This move follows a series of similar decisions by other companies in recent years.

According to Bloomberg, 2021, 2022, and 2023 saw the highest number of spinoffs in the past decade, with 211 companies completing spinoffs in 2023 alone. Johnson & Johnson, Kellogg, and General Electric are just a few examples of companies that have recently split up their businesses.

Barry Cross, a professor at Queen’s University Smith School of Business, explained to Bloomberg that these companies are realizing that they may be more valuable with focused leadership teams and fewer distractions from unrelated business units.

While industrial conglomerates may be on the decline, Big Tech companies like Amazon, Apple, and Google are adopting a similar strategy. Critics argue that these tech giants have become too powerful and are facing antitrust lawsuits for their monopoly-like behavior.

The bottom line is that bigger isn’t always better. Companies are recognizing the value of streamlining their operations and focusing on what they do best. The future of corporate structure is evolving, and it will be interesting to see how this trend continues to unfold in the coming years.