PDSnet Glossary

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Definition

A method of valuing a company by valuing its separate divisions of parts and then adding them up to arrive at a total value for the company. This gives a different (usually higher) value than net asset value (NAV) because operating assets are often worth more as a profitable entity. Their value is determined by their ability to generate profits going forward. For example, investment holding companies often prefer to use an SOTP valuation because they typically trade at a discount to the market value of the shares that they own.

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