TMT Blog: Seriously, it’s not you but me…

Is it just me or does there appear to be more corporate divorces than usual in the air right now? eBay and PayPal, HP and Compaq, Symantec and Veritas and many others have all recently decided to end their relationships and have sometimes provided reasons more typical to those of a marriage ending rather than language we would expect in the corporate jungle.

What has driven this trend and why does it seem more prevalent in our TMT sector? Well, perhaps big is really not for the better anymore. More relevant within TMT, as trends change almost daily, many organisations are realising that their large structures are less suitable and specifically cannot make fast decisions. Furthermore, a large entity will sometimes be caught by internal conflict – for example, in having to consider the relevant impact to each and every business unit when launching products and services.

I believe this trend of divorcing (or perhaps we should say conscious uncoupling) will continue as more and more shareholders realise the impact to value in the long run – PayPal shares rose 9% on the day of its announcement. In fact, recent experience has demonstrated that – on average – large conglomerates destroy value over time through a lack of focus, mismanagement of cultures or loss of discipline.

TMT is often the perfect home for the more nimble business that can constantly react and then change its strategy (with risk, but therefore a greater reward). So just remember, sometimes small really is beautiful…