If you are a large, complex company, a spin off can help you better cash flows. How? Step: 1 Choose a division of the business that will grow quickly. Step: 2 Create a separate firm with that division. Step: 3 Maintain an interest in the firm, rather than selling it. Step: 4 Focus on dedicated resources to maintain these divisions to achieve a higher revenue.
The trend of spinning off divisions in a large business to create a new business is running hot in the global market. Recently, Symantec announced its decision to split its business divisions in to two to meet the needs of rapidly shifting business landscape in the global security market. There are several reasons why Symantec initiated such a move. One of the main reason behind this move is the global security market is challenged and in many instances handicapped by the growing number of security breaches and threats. To curb this, companies in the global security market are considering spin-offs.
Increasing Number of Sophisticated Security Threats Pushing Firms to Split Business to Combat Threats Better
Following the footsteps of Symantec, companies in the global security markets, by splitting business into dedicated divisions, can give undivided attention to niche segments to combat sophisticated cyber threats. This can be a proactive approach to deal with issues such as cyber security issues, data network security threats, and cloud security loopholes. Moreover, having an expert team tackling these issues can help resolve security challenges and implement improved anti-threat solutions in a much faster turnaround time.
According to a market research firm, Transparency Market Research (TMR), the global data center security market, cloud security market, and managed security services market will observe growth in double-digit CAGRs in the coming few years. The global data center security market is expected to grow at a 12.6% CAGR during 2014 to 2022, while the global cloud security market will expand at a somewhat similar 12.8% CAGR during 2015 to 2022. On the other hand, the global managed security services market will grow at a marked 15.4% CAGR during 2013 to 2019.
For additional information about the global data center security market report, visit: http://www.transparencymarketresearch.com/data-center-security-market.html
Spin-offs can Deliver Higher Revenue and Reduce Operational Complexity
Besides helping to curb the increasingly complex nature of security threats and build a multi-channel revenue stream, companies are adopting spin offs. In addition to this, by splitting the business, the company can grow better and faster. Such a split can help companies to tap on to more cash flow and focus more on revenue.
Spin-offs in the global security market can also enable businesses to focus better on their R&D investments. Furthermore, such splits can help reduce the operational complexity in large organizations and enhance their go-to-market capabilities.
Challenges to Consider before Initiating a Spin-off
Though there are many benefits of spin-offs, firms in the global security market should analyze the challenges associated with it before taking such steps. Companies need to mitigate the economic risks, when scaling for growth. In addition to this, companies need to ensure they run these separate divisions, while maintaining successful consumer dynamics. The large firms need to ensure that each division continues to support its partners and consumers, while delivering the maximum value to its shareholders.
According to Credit Suisse research study last year, spin-off surpasses the S&P by around 13% points in the year after their liberation. Another recent study by a finance professor A. Shivdasani at the University of North Carolina demonstrates that split ups of businesses can provide elevated financial strength and shareholder value.
The outcome of such spin offs is mostly positive. So, the giants in the security market by taking such steps can hope for a more lucrative business.