A measure of value (valuation), at the level of an entity as a whole, that calculates the combined market capitalization (market cap) of each and every division/ section in the entity that is run and operated as a standalone publicly traded entity.
Differently stated, a breakup value reflects the market value of an entity if its parts/ units operate independently or were to be sold off as standalone, independent entities. Breaking up and selling off the individual units would make sense if the collective value of all the units (i.e., the market value of the single entity) is lower than the value of individual units (the breakup value). This can help realize more value for an entity’s shareholders, given the difference in value between the two scenarios.
