For the Stock Market’s Biggest Companies, There May Never be a Better Time to Break Up

I am quoted in this CNBC article:

“Consolidation (acquisitions) may be more likely to occur during a bull market that is not yet perceived to be fully valued. However, in later stages of bull markets, divestiture may be a very effective approach to maximizing shareholder value,” Kass said. The “conglomerate discount,” he added, is removed when individual businesses can trade on their own and be more easily valued by the market.

“Decision making, including allocation of capital, is quicker without the need to receive approvals from additional levels of management at the parent corporation,” said David Kass, clinical professor of finance at the University of Maryland’s Robert H. Smith School of Business. He has followed spinoffs for many years and said the data going back decades is clear on the outperformance of companies that were spun off relative to the overall market.