because they forced their policies and standards onto the new startup company.

It's the classic mistake: you setup a separate 'startup style' company to move fast, but give them too much budget and too much rules, so they just spend the budget on rebuilding the same mess instead of innovation. It's a consultant heaven to make a lot of money, but in the end this really only works if the group company stays in the dark for a considerable amount of time and doesn't impose their ideas