|
Sum-of-the-parts Analysis
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 Security (finance), securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own Share ..., 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. 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. The equity value is then calculated by subtracting net debt and other non-operating adjustments. References {{Corporate finance and investment banking Corporate finance * ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Multi-divisional Form
Multi-divisional form (also known as M-form or MDF) refers to an organizational structure by which the firm is separated into several semi-autonomous units which are guided and controlled by (financial) targets from the center. Overview Multi-divisional forms encompass subsidiary parts of a single legal entity ( Chandler 1962, 1977, 1990). Although the corporation is controlled by senior managers located in its central office, most quotidian operating decisions are left to the managers of its autonomous divisions. Generally, the central office will organise the provision of services such as managerial expertise and capital for the divisions. The multidivisional form (M-form) is a particular organizational structure in which a firm is divided into semi-autonomous divisions that have their own unitary structures. The firm is essentially divided into subsidiary divisions with each being responsible for a product or region (Chandler 1977). Top management is located in the central offic ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Holding Company
A holding company is a company whose primary business is holding a controlling interest in the Security (finance), securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own Share capital, stock of other companies to create a corporate group. In some jurisdictions around the world, holding companies are called parent companies, which, besides holding Share capital, stock in other companies, can conduct trade and other business activities themselves. Holding companies reduce risk for the shareholders, and can permit the ownership and control of a number of different companies. ''The New York Times'' uses the term ''parent holding company''. Holding companies can be subsidiaries in a Subsidiary#Tiered subsidiaries, tiered structure. Holding companies are also created to hold assets such as intellectual property or trade secrets, that are protected from the operating company. That creates a smaller risk when it comes ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Conglomerate (company)
A conglomerate () is a type of multi-industry company that consists of several different and unrelated List of legal entity types by country, business entities that operate in various industries. A conglomerate usually has a Holding company, parent company that owns and controls many Subsidiary, subsidiaries, which are legally independent but financially and strategically dependent on the parent company. Conglomerates are often large and Multinational corporation, multinational corporations that have a global presence and a diversified portfolio of products and services. Conglomerates can be formed by merger and acquisitions, Corporate spin-off, spin-offs, or joint ventures. Conglomerates are common in many countries and sectors, such as Media (communication), media, Finance, banking, Energy industry, energy, mining, manufacturing, retail, Arms industry, defense, and transportation. This type of organization aims to achieve economies of scale, market power, Risk management, ris ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Conglomerate Discount
Conglomerate discount is an economic concept describing a situation when the 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 inability to manage various and different businesses as well as do focused companies. Therefore, the market penalizes a multi-division firm and attaches a lower multiple to its earnings and cash flows, thus creating the discount. However, the opposite concept, called conglomerate premium, also exists. Developed vs emerging markets In the developed economies, the average value of the discount may be 13–15% relative to single-segment competitors. Because of the discount, conglomerates have become much less common in the developed markets than they once were. Only several star performers, such as Berkshire Hathaway, have managed to escape the market’s critical assessment of overdiversification. However, conglomerates are still common in a number of e ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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) and shareholders (preferred and common). Enterprise value is one of the fundamental metrics used in business valuation, financial analysis, accounting, portfolio analysis, and risk analysis. Enterprise value is more comprehensive than market capitalization, which only reflects common equity. Importantly, EV reflects the opportunistic nature of business and may change substantially over time because of both external and internal conditions. Therefore, financial analysts often use a comfortable range of EV in their calculations. EV equation For detailed information on the valuation process see Valuation (finance). : Enterprise value = :: common equity at market value (this line item is also known as "market cap") :: + debt at mar ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Corporate Finance
Corporate finance is an area of finance that deals with the sources of funding, and the capital structure of businesses, the actions that managers take to increase the Value investing, value of the firm to the shareholders, and the tools and analysis used to allocate financial resources. The primary goal of corporate finance is to Shareholder value, maximize or increase valuation (finance), shareholder value.SeCorporate Finance: First Principles Aswath Damodaran, New York University's Stern School of Business Correspondingly, corporate finance comprises two main sub-disciplines. Capital budgeting is concerned with the setting of criteria about which value-adding Project#Corporate finance, projects should receive investment funding, and whether to finance that investment with ownership equity, equity or debt capital. Working capital management is the management of the company's monetary funds that deal with the short-term operating balance of current assets and Current liability, cu ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
