When would you use Sum of the Parts?

This is most often used when a company has completely different, unrelated divisions – a conglomerate like General Electric, for example.

If you have a plastics division, a TV and entertainment division, an energy division, a consumer financing division and a technology division, you should not use the same set of Comparable Companies and Precedent Transactions for the entire company.

Instead, you should use different sets for each division, value each one separately, and then add them together to get the Combined Value.