Sum-Of-Parts Valuation

The stock was trading for $70. It had 3 divisions. As stand-alones, they were worth $25 a share, $40 a share, and $15 a share. The sum of their parts as noted was that, broken up, the company was worth $80. Why did the company then trade for only $70?

Well, there are a number of reasons, but in large part it was the CEO, who was politically extreme. She made her politics known and alienated half the country. So that half simply didn't want to own her shares and deal with her politics.

A banker went through the first division, which was a dog, trading at 10x $2.50, and explained how, just taking that one piece out of the holding company would add 5 bucks in value to the stock. But, unit by unit, it became clear that the company should be split up to force Wall Street to recognize the value of the company in its three parts, and if it didn't, then others (private equity risk-takers) likely would...and pay a big premium to own one of the 3 main divisions.

They could do all that via a sum-of-parts valuation, i.e. just fire the CEO and replace her with someone who kept their politics to themselves, and just ran a good company.