Valuation of a Holding Company

How would you value a holding company who holds several holdings companies as its subsidiaries? the holding company’s primary income comes from dividends from its subsidiaries and dividends from other equity investments. What valuation approach to use when dealing with this kind of company?

an easy way is to aggregate the earnings and apply a multiple. lol. but typically you’ll want to sotp. what you plan to do with the investmetns will affect how you value it.

if you plan to hold those companies, in which case, you value those cos at market. predict it using comparables.

if you plan to sell them. then you gotta discount it. taxes and closing costs alone will knock off around 15 to 20% of value.

In general you can value each subsidiary/ equity investment pro-rata separately on a DCF basis. You then sum-up the pro-rata values and deduct from that the NPV of costs of the holding organization. Reagards, Oscar

If you do what Oscar says, don’t forget to eliminate intercompany operations.

Would a conglomerate discount apply in this sort of valuation?