Breaking up, it turns out, really is hard to do. For many executives, the prospect of selling a business triggers a vague sense of dread. Perhaps the sale will seem like a tacit admission of failure or evidence of poor management. In some close-knit corporate cultures, it may even smack of treason.

It should not be surprising, then, that when executives do divest, it is nearly always in response to pressure—maybe the divested business is suffering heavy losses, the parent has a suffocating debt burden, or Wall Street analysts have turned negative. Among 50 of the largest divestitures completed over the past four years, we found that more than three-quarters were completed under pressure, most of them only after long delays when problems became so obvious that action was unavoidable. Furthermore, in our study of the 200 largest US corporations during the 1990–2000 period, fewer than half divested three or more substantial businesses—those with a disclosed worth of at least $100 million. Only one in five divested more than a half dozen substantial businesses. Taken as a group, the companies we studied bought 40 percent more businesses by number of transactions than they sold.

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