breakup value

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Breakup value

Breakup Value

The value of a division in a company if that division were its own independent company. Companies considering taking over another use the breakup value, among other metrics, to determine whether a takeover is worth the time and expense. It is also called the private market value.

breakup value

The market value of all the individual parts of a firm if the firm were to be broken up and the individual parts operated independently. If the breakup value of a firm exceeds the market value at which its stock trades, the firm may be managed and operated inefficiently. In such a case, stockholder holdings would increase in value if parts of the firm were divested. Many takeovers originate when raiders spot firms with breakup values that exceed the prices at which those firms' stocks are traded.
References in periodicals archive ?
These dispositions have allowed us to take advantage of the imbalance between the higher private market values for our hotels and the lower value of our company as determined by the public market."
When a sellers scans book ISBNs, the Bookseller app provides real-time buyback offers from reputable online vendors, as well as the book's private market values, so that sellers know how much they can expect to earn by selling their used books on sites such as Craigslist and Ebay.
Furthermore, the investment manager's outlook states that the likely degree of decline in private market values is more than fully reflected in the pricing of REIT stocks today.
And all this should also convince market participants that private market values are well higher than public trading prices, and that private market players can be and are much more aggressive.

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