Sum-of-the-parts analysis

In today's world, Sum-of-the-parts analysis occupies a central place in our lives. Whether through its impact on society, fashion, science or culture, Sum-of-the-parts analysis arouses constant interest and generates a variety of opinions and debates. From its origins to its influence on the present, the presence of Sum-of-the-parts analysis is undeniable and inevitable. In this article, we will closely explore the importance of Sum-of-the-parts analysis and its role in different aspects of everyday life, as well as its evolution over time.

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

  1. ^ "Sum-of-the-Parts Analysis". macabacus.com. Retrieved 2015-04-01.