Chapter 22: Sum-of-the-Parts and Other Approaches

In this section

• Evaluating Conglomerates and Holding Companies
  Comprehensive insights into the approach and challenges of valuing conglomerates and holding companies, with emphasis on sum-of-the-parts analysis, governance structures, and scenario-based techniques.
• Segment Valuation Techniques
  Learn how to value each business segment individually, adjust for synergies and overhead, and arrive at a comprehensive sum-of-the-parts appraisal for multi-division companies.
• Cross-Border and Emerging Market Considerations
  Explore key challenges, methodologies, and best practices in valuing multinational conglomerates and emerging market segments using a sum-of-the-parts approach. Learn how to incorporate country-specific risk premiums, regulatory differences, and exchange rate assumptions into discount rates while managing data reliability, transfer pricing, and local valuation nuances.
• Practice Vignette: Breaking Down a Multisegment Firm
  An in-depth exploration of sum-of-the-parts valuation for multi-segment companies. Learn overhead allocation, synergy, cross-border discount rates, and final equity calculations using best-practice approaches for the CFA Level II exam.
• Common Pitfalls and Practical Considerations
  Learn how to avoid double counting, manage intercompany transactions, and handle intangible assets when performing sum-of-the-parts valuations, with tips on reconciling segment data, maintaining consistent discount rates, and tackling real-world challenges in valuation.
• Synergies and Overlaps Among Segments
  Learn how operating, financial, managerial, and revenue synergies interact in multi-segment firms, how to quantify them, and how to incorporate negative synergy effects into valuations.