By Tony McAuley
CFO Europe, July '06
(excerpt)

Marakon Associates, a management consultancy, has been conducting a long-term research project to study the elements that go into above average performance for larger companies (above $500m). Studying various measures of performance at 1,000 companies globally over more than a decade, Marakon’s results turned up very few conglomerates among the top performers in terms of total shareholder return (TSR), which calculates capital gains and dividend payouts. Chris Kaye, who leads the research at Marakon, says: "The ‘conglomerate discount’ does exist and as a business model it does underperform against the broad global and regional benchmarks. But really good performers are outstandingly good, with annual TSRs in the range of between 20% and 30% over time—an outstanding performance by any measure."

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