Sum of the parts analysis (SOTP), or break-up analysis, is a method of valuation of a multi-divisional company,

holding company A holding company is a company whose primary business is holding a controlling interest in the securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own shares of other companies ...

, 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; see

Conglomerate discount Conglomerate discount is an economic concept describing a situation when the stock market values a diversified group of businesses and assets at less than the sum of its parts. The explanation of this phenomenon comes from a conglomerate's inabilit ...

. 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 Enterprise value (EV), total enterprise value (TEV), or firm value (FV) is an economic measure reflecting the market value of a business (i.e. as distinct from market price). It is a sum of claims by all claimants: creditors (secured and unsecured) ...

. The equity value is then calculated by subtracting net debt and other non-operating adjustments.

References

{{Corporate finance and investment banking Corporate finance *