conglomerate discount

A conglomerate discount occurs when a large company made up of various, diverse businesses is valued less than the combined value of its individual parts. Investors often see it as inefficient because the company’s different businesses may not tie together well, leading to difficulties in managing and maximizing profits. As a result, the market might assign a lower total value to the conglomerate than the sum of its standalone businesses, reflecting that the company’s diversification can sometimes reduce overall investor confidence and valuation.