Conglomerate_discount
Conglomerate discount is an economic concept describing a situation when the market values a diversified group of businesses and assets at less than the sum of its parts.[1] The explanation of this phenomenon comes from a conglomerate's inability to manage various and different businesses as well as do focused companies. Therefore, the market penalizes a multi-division firm and attaches a lower multiple to its earnings and cash flows, thus creating the discount. However, the opposite concept, called conglomerate premium, also exists.[2]