Diversified Company


DEFINITION of 'Diversified Company'

A company that has multiple, unrelated businesses. Unrelated businesses are those which (1) require unique management expertise, (2) have different end customers and (3) produce different products or provide different services. One of the benefits of being a diversified company is that it buffers a company from dramatic fluctuations in any one industry sector. However, this model is also less likely to enable stockholders to realize significant gains or losses because it is not singularly focused on one business.

BREAKING DOWN 'Diversified Company'

Companies may become diversified by entering into new businesses on its own, by merging with another company or by acquiring a company operating in another field or service sector. One of the challenges facing diversified companies is the need to maintain a strong strategic focus to produce solid financial returns for shareholders instead of diluting corporate value through ill-conceived acquisitions or expansions.

Some of the most well-known American diversified companies are GE, 3M, Sara Lee and Motorola. European diversified companies include Siemens and Bayer; Asian diversified companies include Hitachi, Toshiba, and Sanyo Electric.

  1. Acquisition

    A corporate action in which a company buys most, if not all, ...
  2. Merger

    The combining of two or more companies, generally by offering ...
  3. Hostile Takeover

    The acquisition of one company (called the target company) by ...
  4. Parent Company

    A company that controls other companies by owning an influential ...
  5. Mergers And Acquisitions - M&A

    A general term used to refer to the consolidation of companies. ...
  6. Subsidiary

    A company whose voting stock is more than 50% controlled by another ...
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