We have already discussed the most important valuation tools like the dividend discount model, discounted cash flows, Trading multiples and transaction multiples.
In addition to the above valuation tools, other valuation tools include the sum of parts valuation, liquidation value etc.
Sum of parts is used to value a conglomerate that may have unrelated lines of business. For example, Company A may have its interest in retail, food, internet, manufacturing, tea and more. You can use the sum of parts valuation tool to value a conglomerate like Company A
The most company operated on a going concern basis. However, Liquidation Value is the value of the firm when the company is fully dissolved today.
Sum of the Parts - SOTP Valuation
SOTP Valuations technique is one of the most efficient technique to value a conglomerate with unrelated business segments.