sum-of-the-parts valuation

sum-of-the-parts valuation definition - finance
A calculation showing whether the value of a company would be increased if it were split into separate business units and shares of stocks of the separate units were sold to the public. Conglomerates that buy diverse businesses may decide that the best strategy is to spin-off the separate units because the sum-of-the parts valuation shows that the overall value to the shareholder is increased by spinning off separate units.

Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.

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