# Sum-of-the-Parts Valuation

*Corporate Finance & M&A — Finicade finance glossary*

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.

**Also known as:** SOTP, sum of the parts, conglomerate discount

**Related terms:** [Segment Reporting](https://finicade.com/glossary/segment-reporting), [Spin-Off](https://finicade.com/glossary/spin-off), [Carve-Out](https://finicade.com/glossary/carve-out), [Valuation Multiple](https://finicade.com/glossary/valuation-multiple), [Activist Investor](https://finicade.com/glossary/activist-investor)

Source: https://finicade.com/glossary/sum-of-the-parts-valuation