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Mergers and Acquisitions pp 56–82Cite as

Palgrave Macmillan

Corporate Diversification: The Costs and Benefits of Synergy

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Abstract

In this chapter I take up the question of why some firms pursue diversifycation strategies that are value-decreasing while others engage in strategies that are value-increasing. Two basic diversification strategies are contrasted: the first is a focused strategy in which each firm is run as a stand-alone firm; and the second is a diversified strategy in which two firms are merged and become different divisions of the same firm. The main goal is to understand why some value-decreasing mergers occur, and why some value-increasing mergers do not take place.

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Authors
  1. Felipe Balmaceda
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Editor information

Editors and Affiliations

  1. School of Business and Economics, State University of New York (Plattsburgh), USA

    Greg N. Gregoriou (Professor of Finance) (Professor of Finance)

  2. State University of New York (Plattsburgh), USA

    Karyn L. Neuhauser (Assistant Professor) (Assistant Professor)

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© 2007 Felipe Balmaceda

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Balmaceda, F. (2007). Corporate Diversification: The Costs and Benefits of Synergy. In: Gregoriou, G.N., Neuhauser, K.L. (eds) Mergers and Acquisitions. Finance and Capital Markets Series. Palgrave Macmillan, London. https://doi.org/10.1057/9780230589681_5

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