Sum of the parts valuation

Sum of the parts valuation values a company that operates several distinct businesses by pricing each segment separately, using the multiple appropriate to that specific kind of business, then adding the pieces together. Applying one blended multiple to a company spanning several different business models can obscure more than it reveals, since the market pays different prices for different kinds of businesses even when they sit inside the same company.

When the sum of a company's separately valued segments comes out above what the market prices the whole company at, that's the basic case for a conglomerate discount thesis, an argument that the pieces are worth more apart than the market is crediting the whole. The method is only as reliable as the multiples chosen for each segment, and most companies do not break out clean, standalone financials for every segment, two limitations that shape how much confidence to put in an estimate built this way.