CHAPTER 1Building and Managing a Portfolio of Businesses

Even then, we will make plenty of mistakes.1

—Warren Buffet

For most companies, M&A activity is optional. For a multibusiness portfolio company, however, it is quintessential. Acquisitions drive portfolio companies as their path to value and sometimes their reason for existence.

A portfolio company is an enterprise composed of multiple corporate entities and investments. These “holdings” have usually been acquired, but some may have resulted from the division of a prior business. This chapter focuses on those portfolio companies that maintain these entities as separate businesses—these portfolio companies look to add businesses to the portfolio and occasionally sell businesses from the ...

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