Once again, the secret is in the Thermo strategy. Because the spin-out is already a promising business, the price of the stock quickly rises. The parent always retains a majority interest in each company. This, in effect, allows Thermo Electron to take losses from other Thermo entities and add them to Thermo Instrument's profits for tax purposes. The result, says Sassouni, is that Thermo Electron can reduce its income and lower its tax bracket.
Money raised by the stock sales finances the acquisitions.
These stock offerings have also allowed Thermo Electron to build up cash reserves and, in effect, act as a bank. However, nothing is simple in the Thermo world. Now with grandchildren being spun out, the children are amassing their own banks. Acquisitions are carefully chosen, says Smith. Businesses brought into the Thermo Instrument fold generally complement each other.