Holding-company discount
A holding company’s equity trading below an estimated sum-of-the-parts equity value, compared on a consistent basis after relevant debt, central costs, taxes and other claims.
Holding-company discount in round numbers
Hypothetical, at one valuation date in US$ millions: adjusted equity values of 50, 40 and 30 sum to 120 after all assumed relevant holdco adjustments. A market capitalization of 90 implies a gap of 30, or 25% of the 120 equity-value estimate. Do not compare a sum of operating enterprise values directly with market capitalization.
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| Measure | Amount |
|---|---|
| Adjusted sum-of-the-parts equity value | 50 + 40 + 30 = 120 |
| Holding-company market capitalization | 90 |
| Equity-value gap | 120 − 90 = 30 |
| Discount to estimated equity value | 30 ÷ 120 = 25% |
Terms Related to Holding-company discount
Sum-of-the-parts valuation · Holding company (holdco) · Centralized capital allocation · All of the glossary