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However, all of this growth was somewhat illusory.

When interest rates rose to offset inflation, the profits of the conglomerates fell.

Investors noticed that the companies inside the conglomerate were growing no faster than before they were purchased, whereas the rationale for buying a company was that " synergies " would provide efficiency.

By the late 1960s they were shunned by the market, and a major sell-off of their shares ensued.

To keep the companies going, many conglomerates were forced to shed the industries they had purchased recently, and by the mid-1970s most had been reduced to shells.

The conglomerate fad was subsequently replaced by newer ideas like focusing on a company's core competency.