What is the corporate life-cycle? How does it change company valuations? Answers from a new book

The corporate life cycle is a concept that has been talked and written about for decades in management and strategy circles. Ichak Adizes, a management expert, developed a ten-stage model to describe the corporate life cycle and used it as the basis for an institute founded to advance his ideas, as well as a book on the concept.

The focus in the Adizes life cycle was more on management and the strategic choices that companies must make at each stage. The financial questions were posed with the view that ageing was not easily reversible but that, with superior management, it could be done. Even within management research, there seems to be no consensus on the number of stages in the corporate life cycle and the process by which companies age. In a 1984 paper, Danny Miller and Peter H. Friesen present the corporate life cycle as comprising five common stages: birth, growth, maturity, revival, and decline. This assessment is based on a small sample population of 36 firms that they studied through 161 time periods. They concluded that the path and timing of the life cycle vary widely across companies.

In finance, the corporate life cycle has been used more sparingly, often to explain...

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