Evidence from Spin-offs
The experiences of companies that have split themselves up or spun
off major divisions or groups as separate public companies offer still
more evidence of the power of focus. David Sadder, Andrew Campbell,
and Richard Kochs examination of the aftermath of spin-offs
found that they have led to an average 15 percent increase in the
companies’ relative competitive performance in the stock market.2 In
another study of more than one hundred companies that had undergone
spin-offs, New York analyst Steven Bregman found that the
spin-offs generated an annual rate of return from 1991 through 1996
of 37.2 percent, as compared to only a 17.5 percent increase in the
Standard 8c Poor’s index over the same period. 3