The Role of M&A in Strategic Planning - If a company subsidiary is making money it should be retained?

But if it is not making money, then it should be sold off?

Not necessarily; a unit’s financial performance need not be the sole arbiter of redeployment decisions.  A subsidiary may be returning cash to the business, and even have potential for long-term profitability, yet be a candidate for sale. Conversely, company leaders may validly decide to retain a unit that is struggling financially. The decision should be based on factors that transcend individual unit performance to consider  the impact the unit has had (or may have in the future) on all other units.

It may be profitable, but if it does not fit the mission or vision of the company, it may be impeding the long-term financial performance of the company. Even beyond the company’s financial performance—typically measured by returns to shareholders—company leaders would be wise to consider the interests of other stakeholders as well when making a divestiture decision.

This is the point of the Business Roundtable’s Statement on the Purpose of a Corporation, released August 2019 and subsequently confirmed in 2020 and 2022.