Organization of Centralised Services

Many services in corporate groups are often managed centrally. This makes sense in principle because specific competencies and capacities can be better developed and utilized in a central unit than in individual operating units. As a result, operations can often be performed more professionally and cost-effectively. In some business groups, however, the establishment of central services also serves to justify management fees that are charged to the operating companies.

But there is another aspect that should not be neglected: Despite all the efficiency gains, the establishment of centralised services means that corporate groups lose flexibility at the moment when it comes to separating from individual operating companies. This is because the interwoven nature of the corporate group makes operating units less fungible. Such organizations achieve a lower company valuation. If they are for sale, they should be prepared for the sale. This is a usual issue for companies which should be sold out of a Portfolio of a Group.


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