Parent firms often exit businesses that consistently fail to meet or exceed the parent's hurdle rate requirements.

Question

Quizplus · Accepted Answer

Parent firms have a responsibility to their shareholders to maximize profits and returns on investment. As such, businesses that consistently fail to meet or exceed the parent's hurdle rate requirements may be seen as not worth the investment, and the parent firm may choose to exit or divest from that business unit.

Parent Firms Often Exit Businesses That Consistently Fail to Meet