GE's 400% Breakup Return Is A Wake-Up Call For Every CEO

Forbes

13 hours ago

NEW YORK, NEW YORK - SEPTEMBER 06: CEO of GE and CEO of GE Aerospace, Larry Culp, speaks onstage ... More during GE The Lean Mindset: The Pursuit Of Progress Event at Chelsea Industrial on September 06, 2023 in New York City. (Photo by Ilya S. Savenok/Getty Images for GE)
There was a time when GE symbolized everything wrong with corporate bloat. I wrote about it in 2019, covering the damage done by Welch's financial engineering, Immelt's empire-building, and the pension time bomb that dragged the company into long-term decline. It became a cautionary tale for investors who confused brand power with balance sheet strength. The GE breakup is now a success story that everyone, particularly CEOs, should be aware of.
What followed would have been unthinkable at the time. GE has now delivered a 400 percent return to shareholders through one of the most effective corporate breakups in recent history. This was not a lucky outcome. It was a structural reset.
Larry Culp did not save GE by patching it up. He saved it by dismantling what no longer worked and letting the market revalue the parts. The result is not just a comeback story. It is a signal to every CEO sitting on underperforming assets that the path to value is already in plain sight.
The GE Breakup Blueprint
Culp did what many before him were unwilling to do. He separated GE into three focused businesses: aviation, healthcare, and energy. It was a structural necessity. Each business had a distinct capital profile, a different growth outlook, and a unique investor base. For years they had been buried inside a complex, legacy-driven machine that masked their true value.
The aerospace unit became GE Aerospace, a pure-play with visibility, margins, and scale. GE Healthcare stepped into a sector where clarity and comparables drive multiples. GE Vernova, the energy unit, aligned with the market's demand for clean transition and infrastructure exposure. These were not spinoffs in name alone. Each company now controls its own cost base, strategy, and capital allocation decisions.
That separation of function is exactly what the market needed. It created three investable stories, not one misunderstood puzzle. This is why The Edge focuses on these types of situations, not just valuation screens. A business is only as valuable as its structure allows it to be. When that structure is misaligned, price alone tells you nothing. GE's transformation is proof that when incentives and operations are realigned, the value follows quickly.
GE Vs S&P Post Spinoff
The Market's Reaction To The GE Breakup
Once the separation plan was set in motion, the market responded with precision. Investors didn't need another narrative. They needed clarity. With each division operating independently, the ability to assign real multiples returned. GE Aerospace quickly established itself as a dominant player in a post-COVID aviation cycle. GE Vernova captured attention as a levered play on energy transition and grid modernization. GE Healthcare stepped into its own, attracting sector-focused capital that once ignored the parent entirely.
What resulted was a strong re-rating. The market priced the businesses as they were, not as they had been hidden inside a tangled conglomerate. I called this early in my 2024 Forbes piece on GE's revival, when the breakup began to gain traction with institutions. Barron's followed with a lead feature quoting my assessment of Culp's plan. The message was the same: the market doesn't reward some fantastic ideas (this can be the major problem with turnarounds); it rewards a laid-out, quantifiable structure. Once that changed, so did the stock. The 400 percent return was the consequence, not the goal.
What set the GE breakup in motion wasn't a new product or a market shift. It was leadership. Larry Culp saw what his predecessors refused to acknowledge. GE didn't need to be fixed. It needed to be stripped back. For decades, successive CEOs measured success by size—more divisions, more deals, more complexity. Culp reversed that thinking and proved that focus, not scale, is what drives shareholder return.
Under Welch and Immelt, GE had become a monument to corporate ego. Diversification was seen as strength, even as the market lost the ability to value the parts. Culp understood that investors don't want a riddle. They want clean stories, clear numbers, and defined upside.
This same leadership vacuum now exists at Boeing. I laid that out earlier this year in a piece calling for a rockstar CEO to take the reins. The lesson applies across sectors. If leadership isn't aligned with structure, value will stay hidden. The GE breakup worked because someone was finally willing to make hard decisions.
GEV Vs S&P Post Spinoff
Why Most CEOs Still Resist The GE Breakup Playbook
Despite the success of the GE breakup, most CEOs still avoid this path. Not because it lacks merit, but because it requires a level of self-awareness that many don't possess. Breaking up a business means admitting that the structure you built no longer serves shareholders. That's a hard pill to swallow for executives whose careers were spent expanding, acquiring, and defending size as a strategy.
The diversification myth still holds power. It gives the illusion of stability while masking underperformance. The market doesn't want blended results. It wants exposure to what works, without the drag of what doesn't.
The real reason more companies don't follow GE's lead is simple. Change threatens control. A breakup reduces influence, reshapes org charts, and opens management to scrutiny. So instead of running toward structural change, most CEOs run from it. That choice may protect their tenure, but it leaves shareholder value locked in the shadows.
The Investor's Edge
The GE breakup reminds us where real alpha lives. It is not found in low multiples or discounted cash flows alone. It is found in structure, timing, and the presence of a catalyst. A cheap stock without change is just a value trap and I always speak about cheap stocks becoming cheaper. A misunderstood business in the middle of a structural shift? That's an opportunity.
This is what I wrote about in Price Catalysts: 'Value without a trigger is just dead money.' The market doesn't reward potential. It rewards movement. That's why the GE story mattered. The setup was there for years—misunderstood assets, bloated overhead, misaligned capital. But only when the structure changed did the return appear.
At The Edge, this is where we focus. We don't chase momentum or screen for what's cheap. We look for businesses on the verge of transformation. Spin-offs. Restructurings. Activist pressure. Forced selling. These are not stories. They're setups. GE wasn't a surprise to those watching the structural pressure build. It was a long-awaited release of value the market had simply stopped believing in until it couldn't ignore it anymore.
GEHC Vs S&P Post Spinoff
The GE Playbook Is Public
The GE breakup is no longer a case study. It's a playbook. Every CEO and board now has a real-world example of what happens when structural change meets disciplined leadership. Mediocre boards can't pretend anymore. You don't need a new product, a market shift, or the perfect macro backdrop. You need a willingness to rethink what you've built and the courage to unlock what's already there.
The same logic applies to other conglomerates hiding value. Boeing still carries too much weight from its disjointed divisions. Johnson & Johnson took a step in the right direction but stopped short of full separation. Consumer giants with sleepy product lines and overgrown portfolios are no different.
You don't need new tech. You need new thinking. The GE breakup didn't invent value. It revealed it. And it showed that the fastest way to deliver shareholder returns is often the hardest, changing the very structure that once defined you.
Act Before The Market Forces You
GE waited until it had no choice. Most companies do. But the GE breakup shows what happens when the right leadership acts before the market demands it. The value was always there. Value release sometimes needs a catalyst. If you're running a company sitting on undervalued assets, you have a decision to make. Wait until you're forced into action or lead the revaluation yourself. Because if you don't unlock the value, someone else will. And when they do, it won't be on your terms. The playbook is open. Time is not on your side.