Welcome to The Business Buying Academy with Sieva Kozinsky. Here's what we have in store for you today:

• They bought too many businesses​
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• 20+ people showed me how to buy a business
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🔑 When Conglomerates Go Wrong

In the 1960s, American businesses were swept up in a wave of optimism.

Post-World War II prosperity, a booming stock market, and loose antitrust enforcement created a perfect storm for companies to expand.

Enter the conglomerate, the hot new business model of the time

The pitch to investors was simple:

Diversification would reduce risk, unlock synergies, and boost shareholder value.

Companies like International Telephone & Telegraph (ITT) and Gulf & Western became poster children for this strategy, acquiring everything from hotels to insurance firms.

Here are a few of the businesses ITT owned outside their core telecom business:

• Sheraton Hotels
• Educational Services, Inc (for-profit schools)
• Avis Rent-A-Car
• Continental Baking (Wonder Bread)
• Levitt & Sons (a suburban homebuilding company)
• Hartford Insurance (Insurance & financial services)

The logic seemed sound.

By spreading operations across industries, conglomerates could hedge against economic downturns in any single sector.

Wall Street loved the growth story. Investors rushed to get in on the next hot conglomerate.

Tax loopholes and creative accounting further sweetened the deal, allowing firms to pool earnings and inflate reported profits.

But no company embodied this era’s ambition, or its pitfalls, like ITT.

Founded in 1920 as a telecom firm, International Telephone & Telegraph (ITT) transformed under CEO Harold Geneen into a conglomerate juggernaut.

From 1959 to 1977, Geneen orchestrated over 300 acquisitions.

His philosophy was that good management could transcend industry boundaries.

He implemented rigorous financial controls, demanding monthly reports from each division to ensure profitability.

ITT’s stock soared, and by 1970, it was one of America’s largest corporations, with revenues topping $7 billion. The conglomerate model seemed unstoppable, with Geneen hailed as a visionary.

The Downfall of Conglomerates

But beneath the glossy numbers, cracks were forming. Here are a few of the issues:

• The promise of synergies rarely materialized.
• ITT’s business units, from telecom to bread, shared little in common. Instead of efficiency, the conglomerate structure created complexity.
• Managers struggled to oversee industries they didn’t understand, and corporate bureaucracy ballooned.
• Conglomerates often used “pooling of interests” accounting to inflate earnings, merging acquired firms’ financials without reflecting true costs.

When economic conditions tightened in the late 1960s (marked by rising interest rates and a stock market slump) these weaknesses became glaring. ITT’s stock plummeted as investors questioned the sustainability of its growth.

By the early 1970s, high-profile scandals, including ITT’s alleged involvement in Chilean politics to protect its assets, further eroded trust.

By the way, ITT is still around today. But their revenue is actually lower than it was 55 years ago ($2.99 billion vs. $7 billion in 1970).

Of course, conglomerates are still around today.

The strategy can be wildly successful (see Berkshire Hathaway, Johnson & Johnson, and even Disney).

The Takeaway: All businesses are challenging to run. There is no magic structure or business idea that prints money in perpetuity.

However, investors will continue flocking to the next hot trend. In the 1960s it was conglomerates, in the 90s it was Dot Com companies, and today it's AI.

Many of the companies will continue to thrive (Amazon and Google emerged out of the Dot Com Bubble as countless other internet companies failed).

But the ones who survive will be the well-run businesses who manage their resources responsibly.

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🔑 Here's how you can buy a business

I've built a collection of conversations with people who have bought businesses.

They've told me how they found their businesses, how much they paid for them, and all the mistakes they've made.

I've learned so much doing this.

The businesses range from $1 million accounting firm to $100 million manufacturing businesses, and everything in between.

We've got self-funded searchers, private equity partners with billions under management, and horizontal holding company owners looking to add the next great business to their portfolio.

No matter what type of business you're looking to buy, I probably have a story for you. Check out the interview below.

​Watch on YouTube​

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Have a great day,

Sieva

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Disclaimer: nothing here is investment advice. Please do your own research. The information above is just for information and learning.

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