Sum-of-the-Parts Valuation
Also called: SOTP, sum of the parts, conglomerate discount
Sum-of-the-parts values each business segment separately and adds them up, which is how conglomerates are analysed. When the total exceeds the market capitalisation, the gap is the conglomerate discount — the market's judgement that the group destroys value by holding these businesses together. That gap is the standard opening argument for an activist demanding a spin-off.