M&A is not always about getting bigger. Often, it’s about recalibrating a business to focus on core competencies and long-term growth. On November 27, United Technologies announced it would split into three companies by 2020. United Technologies will focus on aerospace, Otis on elevators, and Carrier on air-conditioning and HVAC. United Technologies Chairman and CEO Gregory Hayes said that by splitting up its businesses, each company will be better positioned to serve customers.
Given the different natures and needs of aerospace, HVAC, and elevators, this moves makes sense. Becoming more focused to operate efficiently is essential, especially in today’s customer-centric world where clients expect and need tailored solutions.
It’s interesting to note that the restricting comes after United Technologies closed the $23 billion acquisition of Rockwell Collins, the largest in the aerospace industry. It’s easy to see how a transaction this large would reshape the company, prompting executives to consider the split.
Generating long-term growth requires a strategic vision and the ability to do what’s best for the company, even if it might feel uncomfortable. As you think about your company’s strategy, I encourage you to explore all options and ask the tough questions: Should we exit a business? Sell off a division? Stop doing something? And if the answer to any of these questions is yes, develop a plan to go through with it.
There are countless examples of successful companies buying, selling, and changing over the years, so don’t be afraid to take this step and explore all avenues. Be strategic and make the best decision for the future of your business.