Sum-of-the-parts analysis
Topic: Finance
From HandWiki - Reading time: 2 min
Short description: Method of valuation of a company
Sum of the parts analysis (SOTP), or break-up analysis, is a method of valuation of a multi-divisional company, holding company, or a conglomerate. The essence of the method is to determine what divisions would be worth if the conglomerate is broken up and spun off or acquired by another company; [1] see Conglomerate discount. The analysis calculates a range of values for a conglomerate's equity by summing the value of its individual business segments or divisions to get the total conglomerate's enterprise value. The equity value is then calculated by subtracting net debt and other non-operating adjustments.
References
- ↑ "Sum-of-the-Parts Analysis". macabacus.com. https://www.macabacus.com/valuation/sotp. Retrieved 2015-04-01.
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