Conglomerates get valued on a blended multiple that suits none of their businesses. A sum-of-the-parts analysis uses segment-reporting to value a software arm on revenue multiples and a hardware arm on EBITDA multiples, which often reveals a large gap to the market price.
The gap is usually not free money. Holding-company discounts persist for reasons of tax, control and central overhead, and they close only if management actually separates the businesses.
Example: Northwind's tools arm at 11 times $155M of EBITDA is $1.71B, Cloud at 9 times $210M of revenue is $1.89B, less $150M of central costs capitalised and $335M of net debt, giving $3.1B against a $2.5B market cap.
Related: segment-reporting, comparable-company-analysis, ev-sales, ev-ebitda, net-debt