Dark Side of Valuation, The: Valuing Young, Distressed, and Complex Businesses, Third edition

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Going to Pieces: Disaggregated Value

In all the business valuations we have done through this book, we have valued the aggregated company, using its collective cash flows, across businesses and regions, at a company-wide cost of capital. That is often the appropriate way to approach valuation, but there are cases where you might want to value a company by valuing it in pieces, by either valuing each business and geographic grouping separately, or by valuing its units (customers, users) and then aggregating. Although valuation first principles do not change, the information that we need and the mistakes that we have to avoid change with disaggregated valuation. In this chapter, we begin by contrasting aggregated to disaggregated valuation and ...