Barron’s GE Article: How Did It Come to This?

by David P. Shea

Managing Director at Copper Beech Ventures LLC

In the recent dissection of GE’s value in the Feb. 19 edition of Barron’s the article did not reference the question of “how did it get to this”? The fall of the GE Empire was driven by both exogenous events and self-inflicted wounds. External forces that began GE dominoes to tumble long before the Great Recession were the requirements of Reg FD, revelation of a massively over-levered GE Capital balance sheet topped off by implementation of fair-value accounting. Internally, CEO Immelt’s new management team fumbled away early opportunities to sell GE Capital businesses at higher valuations, added billions in debt for three disastrous acquisitions and probably the most egregious, killed off the Welch-era strategic planning and accountability practices. Mr. Flannery and his team would do well re-setting GE’s culture back to when management scoured every level of the company for ideas about growth an innovation. They will be pleasantly surprised at what they find.

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