Several businesses want to have multiple streams of income while their core business is doing well. This applies especially to new CEOs. They tend to buy over new companies, but realize that that out of 100 companies that diversify, only a few will be successful.
Diworsification is a term coined by famous value investor Peter Lynch, where instead of the company profiting from their new subsidiaries, they suffer losses over long term because the culture of new companies tend merge. This causes a lot of problems for the new companies.
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