Tips for Communicating with Employees During a Spin-Off, Demerger or Divestiture

General Electric, a storied American company, was split into three new brands on April 2 — GE Aerospace, GE HealthCare, and GE Veranova, the last of which will cover the energy industry.

Because the decision was announced in 2021 and didn’t take effect until earlier this year, many questions still exist as to how such an extreme case can be communicated with employees in mind.

We spoke with Ted Birkhahn, managing director at Vested, who shared what he’s learned from working on spin-offs in the past. Companies typically spin off a business unit when it’s determined there’s more value in the company if it’s broken up into separate parts rather than being managed together.

“You see this sometimes in conglomerates,” Birkhahn explained. “When some holding companies get too big and end up in such diversified industries, it’s hard for investors to understand how to value the business.”

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