We're now ready to do the valuation with a sum of the parts method.

What we're going to do is analyze the individual segments, value them using their own valuation methods, and then unify them into an EV.

Once we've dealt with the pensions, we're then going to cross the bridge and relate that to equity.

First, we're going to go and grab a segmental EBITDA for the two segments.

We need to carefully grab 2024 because we're doing a one year forward basis, and then we're going to do the same thing for performance.

We can then put together a total, and now we're onto the next column.

You've probably already noticed that corporate HQ is not in here.

Our approach in this model will be to allocate the central costs to the individual segments on the basis of their relative size.

If we go and grab the central total ebitda, so there's the corporate EBITDA for 2024, we're now gonna award that negative EBITDA to each of the segments based on its relative size to the total.

So for example, decorative paint will get a proportion based on its size, divided by the total.

We'll do the same for performance, and then we'll net them out.

And there we've got our net 2024 ebitda.

Now going to value each of the segments based on a target EV ebitda, and that's easily said.

We should probably think about what we're doing here.

Decorative has a multiple of eight, and this eight may come from comparable companies such as pure play paint companies.

So if you could get your hands on some information about a company that just sells paint, then you could try and put together an EV EBITDA for that company, and then you could apply it to this segment as if it were a paint company, because in fact it kind of is.

We would then do the same for performance coatings, and you can see that perhaps the growth or margin perceived in that sub-sector is slightly higher, and that is leading to a higher valuation.

The reason that we would take the allocation of central and deduct it from the 2024 EBITDA of the segment is to avoid having a third line here with a third division corporate and having to come up with a target EV at D for headquarters.

That would be difficult. We would also end up with a negative valuation here.

We've now got the total EV, and that is the value for operations for Axo.

At this point, or at subsequent points, we may want to apply a conglomerate discount for other companies.

We haven't done that here because our judgment is that these two segments are quite complimentary.

They use some of the same processes and synergize quite well if the two segments were very different to each other.

So for example, if Axo was doing oil and gas exploration, which some of the really major diversified do like Shell, then the segments would be so far apart that they would almost cause dise economies of scale.

And that might lead an investor to look at this and say, that is too optimistic.

And so they may apply what's called a conglomerate discount of perhaps 10, 15%.

We're not gonna do that with Axo, like I've said, because the two are fairly adjacent.