For those of you in the Northern Hemisphere, we hope you are having a great summer!
Recently, Nelson Peltz, CEO of Trian Partners, told a story on CNBC’s “Seeking Alpha” about the cost of business complexity in DuPont. He was talking about the divestiture of their paints business.
Peltz said, “Dupont said they sold the business for about 12 1/2 times EBITDA. When Carlisle put out a bankbook to finance it, they said they bought it at about 6 1/2 times EBITDA. Now, nobody was lying. Nobody was, everybody was telling the truth… the difference is the allocation of corporate overhead…”
He continued later, “Dupont is a conglomerate. It’s a complex business and we are always trying to simplify businesses, because simple businesses grow faster. Complex businesses don’t.”
You can see the video here: http://video.cnbc.com/gallery/?video=3000293276&play=1
Certitude Group exists to help our clients improve business performance. Our Enterprise Performance Optimization (EPO) offering puts a bullseye target on business complexity. Business complexity not only drives up cost, it also makes it difficult to comprehend what is really happening in the business.
Moreover, companies that are hamstrung by complexity usually find that growth objectives are seemingly out of reach even though everyone is working harder than ever. We have found this to be especially true with organizations looking to better understand their cost to serve and market growth opportunities.
Unfortunately there is more, even with all that, there is a much greater price businesses pay for complexity: poor decision-making. How can you make good decisions regarding strategic and operational matters based on conventional wisdom and insufficient information? Well, you really can’t…
If you’d like to see case studies and real results go here: http://www.certitudegroup.com/downloads