Definition for : Conglomerate discount

A conglomerate discount exists when a conglomerate is worth less than the sum of its parts. Conglomerate discount is usually due to investor fears of poor allocation of resources and to the administrative costs incurred by the conglomerate.

(See Chapters Chapter 32 Capital structure and the theory of perfect capital markets and Chapter 40 Setting up a company or financing start-ups of the Vernimmen)

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