What is a Breakup Value?
” Also known as the private market value (PMV), the breakup value has to do with the assets that are owned by a company. Essentially, the breakup value is calculated by determining the resale value of each of the departments or divisions of each company, along with the assets of land, buildings, equipment, and cash in hand that are assigned to each division. Breakup values are especially helpful when a group of investors is considering the acquisition of a particular corporation. . A high breakup value is an indicator of the presence of a credible amount of assets.
Also known as the private market value (PMV), the breakup value has to do with the assets that are owned by a company. Essentially, the breakup value is calculated by determining the resale value of each of the departments or divisions of each company, along with the assets of land, buildings, equipment, and cash in hand that are assigned to each division. Breakup values are especially helpful when a group of investors is considering the acquisition of a particular corporation. A high breakup value is an indicator of the presence of a credible amount of assets. The assets may be held by both a parent organization and a series of subsidiaries, or be distributed among various locations or divisions that operate under the same company name. The task of determining the breakup value is made easier when each of the divisions or subsidiaries operate with their own stock price. Investors who wish to find bargains will often investigate the breakup value of a company before choosing to make an
