This is called a sum of the parts valuation.

Because each segment is so distinct, creating an overall valuation for the company is difficult and can be inaccurate.

It's common to do a sum of the parts.

The idea of this approach is to perform a separate valuation on each major part of the business using a separate methodology.

You could theoretically use A-D-C-F-A discounted cash flow for one part, a trading comparable for another, a replacement cost for another, and so on.

In practice, multiples based approaches are most common.

Here you can see the valuation of Chase Core, an American diversified chemical player.

This is being done by an advisor to KKR, A large private equity player.

The advisor has got segmental reporting and created a forward EBITDA for each of the three segments.

It's uses experience in each sub-sector to come up with target multiples for each segment.

Notice that tapes is trading much lower than sealants.

It may be that tapes as an industry is not high margin or growth.

It's this detail that would be lost if you did one overall multiple for Chase.

It would also mean you'd need to come up with a comparable company, which has the same split of sealant tape and protection sales as Chase, which is a very difficult prospect.

Once the three EVs are created, the bridge can be crossed and an overall valuation for Chase can be made in this case, around $109 per share.

Chase's segments are all in the specialty area of the chemicals industry, so it's less likely a big conglomerate discount would be used.

A conglomerate discount would be necessary if the company were operating in really distinct segments that don't synergize very well.

For example, DAO works in commodity and specialty chemicals, which have very different production processes.

If this were the case, you could see a discount of, for example, 15% applied, although that could also be represented in the multiples.