Conglomerates are dead. Long live conglomerates.
General Electric Co., Johnson & Johnson and Toshiba Corp.’s breakups this week may have signaled to many the last gasp of a bigger-is-better ethos that’s been losing favor for decades. Activists and corporate governance advocates cheered what seemed to have marked the end of an era of placing blind faith in an almighty CEO overseeing an opaque web of unrelated businesses.
But focus may not really be back in fashion, according to Baruch Lev. The New York University professor has analyzed more than 36,000 mergers and acquisitions in recent decades and found — to his surprise — that so-called conglomerate, or unrelated, acquisitions over the past five years accounted for nearly half of all deals. That’s up from between 35% and 40% in the two decades before.