{"id":23780,"date":"2021-01-16T18:22:58","date_gmt":"2021-01-16T22:22:58","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=23780"},"modified":"2021-01-24T18:10:33","modified_gmt":"2021-01-24T22:10:33","slug":"ling-temco-vought","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/ling-temco-vought\/","title":{"rendered":"Ling-Temco-Vought: Acquisitions Led to Failure"},"content":{"rendered":"\n

What was Ling-Temco-Vought? How did the company fail, and what can we learn from its stock performance?<\/p>\n\n\n\n

Ling-Temco-Vought was a large conglomerate with involvement in several areas, including aerospace, sporting goods, and pharmaceuticals. The company experienced incredible growth and then reported major losses at the peak of its sales. As a result, stock value dropped 95%. <\/p>\n\n\n\n

Read more about Ling-Temco-Vought and its stock history.<\/p>\n\n\n\n\n\n\n\n

What Happend to Ling-Temco-Vought<\/strong>?<\/h2>\n\n\n\n

Ling-Temco-Vought was a conglomerate involved in industries as wide as aerospace, sporting goods, and pharmaceuticals. <\/p>\n\n\n\n

(Shortform note: The conglomerate began with a young entrepreneur James Ling, who took his electrical contracting business public in 1955. From that point, he began a blistering pace of acquisitions in a staggering array of industries. Taking advantage of low-interest rates in the 1960s, the company raised huge sums of debt to fund acquisitions. The strategy was relatively simple\u2014as long as an acquired company\u2019s earnings could cover the interest on debt used to acquire the company, the acquisition was profitable.)<\/p>\n\n\n\n

The nominal growth in the company was staggering<\/strong>\u2014revenue began at $7 million in 1958, grew twenty-fold<\/em> within 2 years to $143 million, then grew again twenty-fold again to $2.8 billion by 1968.<\/p>\n\n\n\n

Yet warning signs appeared through this steady rise<\/strong>:<\/p>\n\n\n\n