Sum-Of-Parts Valuation
Valuing a company by determining what its divisions would be worth if it was broken up and spun off or acquired by another company. Investopedia Says:
For example, you might hear that a young technology company is "worth more than the sum of its parts". This means that the value of the tech company's divisions could be worth more if they were sold to other companies. In most cases, larger companies have the ability to take advantage of synergies and economies of scale that are unavailable to smaller companies, enabling them to maximize a division's profitability and unlock unrealized value. Related Terms:
Acquisition
Acquisition Premium
Asset Stripping
Breakup Value
Carve-Out (Equity Carve-Out)
Conglomerate Discount
Spinoff
Split-Off
Subsidiary
Tax-Free Spinoff |