Asset Sale

This special situation is closely related to the sum of the parts valuation of the company. There are many companies that trade at a significant discount to its SOTP and have their assets undervalued by the market. In such cases, an asset sale could become a catalyst for the share price increase as when the assets eventually get exchanged into cash, the market is much more likely to start recognizing that value.

Asset sale situations require a sum of the parts valuation of the company in order to see its financial position and potential valuation post-sale. It is also important to check the transactional details of the sale, estimate the chances of failure (buyer’s credibility, conditions), and whether there were any other buyers present.

Published on: April 14, 2021  •  Published by:
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