In 2022, General Electric — once the most valuable company in the United States, a 130-year-old symbol of American industrial dominance — was worth $68.8 billion. It had spent decades as the definitive conglomerate: aviation, healthcare, energy, financial services, all under one roof, all justified by the logic that a diversified empire was more resilient than any single-sector business. By 2026, those same underlying businesses are worth a combined $334 billion. Not because they improved dramatically. Because they separated.

GE’s three new entities — GE Aerospace, GE Vernova, and GE HealthCare — have individually outperformed the S&P 500 by a factor of fifteen since the split. GE Vernova alone is up 122%. The conglomerate structure hadn’t failed these businesses. It had hidden them. When the hiding stopped, the market responded with one of the most dramatic value unlocks in modern corporate history.

GE is not alone. From industrial giants to food companies to media empires, a wave of corporate breakups is running through global business. The companies choosing to get smaller are not doing so out of weakness. They have a specific and well-evidenced reason for it — one that challenges assumptions about scale, diversification, and what it actually means to manage a company well.

Who is breaking up — and what happened

The breadth of the wave is the first thing to understand. This is not a trend confined to one sector or one geography. It is happening simultaneously in industrials, consumer goods, media, technology, and food — and it is accelerating.

The pattern emerging from these separations is consistent. Divestiture activity surged 40% in Q1 2026 versus Q1 2024 across large-cap companies. The companies that broke up earlier are now delivering the evidence that persuades the ones still intact to follow.

Four forces that made this moment inevitable

The conglomerate model did not collapse accidentally. Four structural forces converged to make it economically untenable.

The first is the conglomerate discount — the systematic undervaluation markets apply to diversified companies. When a single company owns businesses across unrelated sectors with different growth rates, capital requirements, and risk profiles, analysts cannot value any of them accurately. The market applies a blended average, which means high-growth units get dragged down by slow-growth ones, and neither is valued on its own merits. The sum of the parts is consistently greater than the whole — not in theory, but in the measurable market data that activist investors have been accumulating for years. Elliott Management’s $5 billion-plus stake in Honeywell came with a specific calculation: 51 to 75 percent upside available to shareholders simply by removing the conglomerate structure. That is not an argument. It is a financial model with numbers.

The second force is the end of cheap capital. The conglomerate model was built for near-zero interest rates, where carrying underperforming business units cost almost nothing and diversification — smoother aggregate earnings across economic cycles — seemed to justify structural complexity. When rates normalised from 2022 onwards, the maths changed. Every underperforming division suddenly carried a real cost. Capital cross-subsidised from stronger units became expensive to maintain. Boards that had deferred the structural question for a decade found it had become urgent.

The third is the management bandwidth problem. In an environment defined by AI adoption, rapid technology cycles, and sector-specific disruption, staying ahead in any single industry now requires full attention. A leadership team simultaneously navigating aerospace regulation, consumer packaged goods marketing, streaming content strategy, and industrial automation cannot give any of those domains what they need. Separation is not just a financial decision. It is a decision about where attention — the scarcest resource in any complex organisation — actually goes.

The fourth is activist investors with better tools. The 2025 vintage of corporate activism is structurally different from its predecessors. Activists are arriving not with vague demands for value creation but with detailed sum-of-parts analyses, credible separation proposals, and the financial resources to sustain campaigns over years. Boards can no longer dismiss these pressures as speculative. They are backed by the GE result, which is now the most frequently cited template in boardrooms considering their own structural options.

Value did not disappear inside these conglomerates. It was obscured by complexity that is no longer profitable to maintain.

What separation actually does — and why it works

The mechanism through which breaking up creates value is specific and consistently demonstrated. It runs through four channels.

The first is strategic focus. When a management team is accountable for one business, with one set of competitive dynamics, one customer base, and one capital structure, decision-making improves. The internal friction of justifying every investment against competing demands from unrelated divisions disappears. The Warner Bros. Discovery separation illustrates this clearly: separating streaming from cable networks allows each to pursue strategies that were impossible while combined. The streaming entity can now partner, merge, or be acquired without the debt complications of the cable business. The cable business can consolidate with similar declining assets and generate predictable cash flows against specific debt obligations.

The second is the pure-play valuation effect. Once a business trades independently, it is valued against directly comparable peers in its own sector. GE Vernova is valued against other energy companies. GE Aerospace is valued against other aerospace companies. Neither drags the other down, and both attract the investor base most motivated to own their specific type of asset. This alone accounts for a substantial portion of the market-cap gains that separated companies consistently achieve in the years following a split.

The third is capital structure. A single conglomerate carries one blended capital structure that may be appropriate for none of its constituent businesses. Separation allows each company to design its balance sheet for its own specific needs: a high-growth unit can carry minimal debt and retain capital for reinvestment, while a mature cash-generative unit can take on leverage and return capital to shareholders.

The fourth is talent and incentives. Conglomerates inevitably blend executive compensation across dissimilar businesses. Separation allows boards to design incentive structures calibrated precisely to each business’s specific opportunities — attracting the leadership profiles that match the business rather than those willing to operate within a generalised corporate framework.

What this wave does not mean

The breakup trend is not an argument against all diversification. Berkshire Hathaway remains one of history’s most successful investment vehicles. Danaher consistently outperforms as a multi-division industrial company. The lesson is more specific: the conglomerate discount punishes diversification that lacks strategic coherence — businesses assembled through deal-making rather than operational logic, sustained by cheap financing rather than genuine synergy, defended by inertia rather than evidence.

“I think it’s tough to generalise and say conglomerates are bad versus good,” said Emilie Feldman, professor at the Wharton School. “But if you are a conglomerate you need to have a real reason for what you are doing — focused on businesses that have similar underlying structural characteristics that make it possible to allocate capital in a clear and consistent way.” Berkshire works because Buffett has spent decades building a machine specifically designed to identify, acquire, and allocate capital across multiple businesses. The problem is not the structure. It is the absence of a genuine reason for the structure.

There is also an execution risk that the breakup wave’s success stories can obscure. The hidden costs of disentanglement — duplicating shared services in IT, HR, legal, and accounting; building standalone financial infrastructure; managing the distraction of a separation process lasting two to three years — can erode the value that separation is meant to create. 3M’s healthcare spinoff Solventum had a mixed first year, facing investor skepticism about its ability to grow without 3M’s R&D resources and scale. The thesis is sound. The execution still matters.

What this means for Bangladesh

Bangladesh has its own conglomerate tradition. The country’s largest business groups operate across multiple sectors — manufacturing, retail, financial services, real estate, media, and agriculture — often with limited structural or operational relationship between divisions. This model served Bangladesh’s growth phase well. Diversification spread risk across a volatile economic environment, family ownership provided patient capital, and the group’s political and financial relationships created competitive advantages that individual companies could not easily replicate.

The global breakup wave raises a question worth examining honestly: as Bangladesh’s capital markets mature, as institutional investors become more sophisticated, and as the management talent required to stay competitive in any single industry grows scarcer and more expensive, does the diversified conglomerate structure remain the optimal model?

The conglomerate discount is not a Western phenomenon. It operates wherever investors can see enough about a company to recognise they are getting an average of dissimilar businesses rather than the best of any one of them. As Bangladesh’s listed companies become more widely analysed and as governance scrutiny increases, the structural questions that activist investors are forcing in New York and London will arrive here too — through different mechanisms, on a longer timeline, but arrive they will.

The most productive framing for Bangladesh’s business leaders is not whether to break up, but what the global breakup wave reveals about the relationship between structure and strategy. The conglomerates that are thriving — Danaher, Berkshire — share one discipline the ones being forced apart lack: a clear and honest answer to why their different businesses belong together, and a capital allocation process rigorous enough to enforce that answer over time. That discipline is available regardless of whether a company is in Dhaka or Detroit. The groups that build it now will be better positioned for the scrutiny that is coming. The ones that don’t will find themselves answering those questions under considerably less favourable conditions.

Author: Rohan Bin Mustafa

SOURCES

Empower Financial — Smaller by Design (Aug 2025)  ·  The Average Joe — GE Breakup Analysis (Apr 2025)  ·  Industrials IB — The Breakup Era (Apr 2026)  ·  CNBC — Kraft Heinz, Kellogg Breakups (Jan 2026)  ·  Intelligize — From Mega-Mergers to Spinoffs (Oct 2025)  ·  Marketplace — Kraft Heinz Undoes Its Mega-Merger (Sep 2025)  ·  Hoven Equity — The Next Two Years Will Belong to Breakups (Dec 2025)  ·  Semafor — Why the Warner Bros. Discovery Merger Was Doomed (Jun 2025)  ·  Wharton / Emilie Feldman — Conglomerate Research  ·  CNBC — For the Stock Market’s Biggest Companies, There May Never Be a Better Time to Break Up