Frasier, Better Call Saul, Joanie Loves Chachi: TV spinoffs can be beloved connections to the past or outright duds. Corporate spinoffs, luckily, are more predictable; they have long been a source of outperformance for investors.
In a spinoff, the separation of businesses allows each to focus on what it does best. That focus creates an advantage that -- at least until the recent bull market -- had produced market-beating returns for generations. However, over the past decade, companies that were spun out have trailed the market by almost 3% annually.
Danaher (NYSE: DHR) is no stranger to the practice of spinoffs. The company has long been known as an ever-changing portfolio of businesses with a focus on manufacturing excellence and decentralized operations, and it has a history of buying, selling, and spinning off companies -- but its strategic focus has shifted. In 2015, management announced it would split into two businesses, maintaining the faster-growing, higher-margin science-based companies and spinning off its diversified industrial units. With history offering mixed results on spinoffs, curious investors might wonder whether this transaction has created value for shareholders.