Module II· Sum-of-the-PartsIntermediate
Question
How do you identify 'hidden assets' in an SOTP valuation?
Answer
Hidden assets
non-operating value components not reflected in group EBITDA. Examples:
- Real estate portfolio (plant land carried below market value on the balance sheet).
- Tax loss carryforwards (NOLs).
- Unconsolidated holdings (e.g. JVs, equity method).
- Patents and trademark rights (often below book value).
- Future asset sales (restructuring options). Valuation: mark each component to market, add to the SOTP aggregate. In activist cases (Elliott at Bayer historically) hidden assets were the main point.
Deep diveShow more details
Pitch tip
'Hidden assets $600m: real estate $400m mark-to-market vs. book $100m, NOL $120m, JV mark-to-market $80m — meaningful uplift to SOTP base.'