How do you value a holding company?

What are the two methods?

• Sum of the parts. Value each subsidiary as if it were sold alone, at the multiple its size and industry command. Add them up. Subtract the cost of running the parent and any debt held at the parent. This is how a skeptical buyer or lender sees a loose collection of businesses.
• Consolidated. Add the subsidiaries' EBITDA, subtract the parent's overhead, and apply the multiple a buyer pays for one company of that combined size. This is how the market values a group that operates as one business.

Use both. The sum of the parts is your floor. The consolidated value is what you are building toward. The distance between them tells you how much of the holding-company argument you have actually earned.

One detail matters for small subsidiaries. Below roughly $1 million of earnings, buyers price businesses on SDE, which adds back one owner's salary. BizBuySell data from 2021 to early 2026 shows an all-sector average of 2.57x SDE. Inside a holding company, each subsidiary has a paid manager, so value it on EBITDA after that salary.

Worked example: three subsidiaries, two valuations

Assume a holding company with three subsidiaries, $300,000 a year of parent overhead and $5,000,000 of net debt. The overhead and debt are assumptions; the multiples are GF Data's 2024 medians.

1. Subsidiary A: $1,500,000 of EBITDA x 4.5 = $6,750,000.
2. Subsidiary B: $800,000 x 4.5 = $3,600,000.
3. Subsidiary C: $700,000 x 4.5 = $3,150,000.
4. Sum of the parts before overhead: $13,500,000.
5. Parent overhead at the same multiple: $300,000 x 4.5 = $1,350,000. Sum of the parts: $13,500,000 - $1,350,000 = $12,150,000.
6. Consolidated: ($1,500,000 + $800,000 + $700,000 - $300,000) = $2,700,000 of EBITDA. At 6.5x: $17,550,000.
7. Platform premium: $17,550,000 - $12,150,000 = $5,400,000.
8. Equity value after $5,000,000 of net debt: $7,150,000 on a sum-of-the-parts basis, $12,550,000 consolidated.

The equity value moves by 76% depending on which story a buyer believes. Debt magnifies the difference in both directions. That is why the premium has to be earned, not assumed.

When does a holding company earn the platform premium?

Buyers pay the consolidated multiple when the group behaves like one company. Signs they look for:

• Related businesses. Same or adjacent industries, with shared customers, purchasing or technicians. A car wash and a software company under one parent do not make a platform.
• Integration. Common systems, shared services and one management team, not three owners who report to you.
• Management beyond the founder. A CEO and a finance lead who could run the group without you.
• Consolidated reporting. Monthly consolidated statements, ideally reviewed or audited.
• A record of acquiring well. Deals bought at sensible prices and integrated without losing customers.

Industry evidence shows the gap is real where these exist. Practitioner estimates for HVAC put owner-run shops at 2.0x to 3.5x SDE, companies with $3 million to $10 million of revenue at 5x to 8x EBITDA, and regional platforms over $25 million of revenue at 9x to 13x.

How does being public change the valuation?

A private holding company's value is an estimate until someone pays it. A public one has a price every trading day, set by the share price times the shares outstanding. That price can sit above the consolidated value when investors expect more acquisitions, or below the sum of the parts when they doubt them.

Two public-market effects matter most:

• Per-share value, not total value. Issuing stock for acquisitions grows the company and the share count together. Castellum's share count rose from about 53 million to about 94.6 million between March 2024 and March 2026, about 78% more shares. Earnings per share must grow faster than that for holders to gain.
• Track record of stock deals. A 2026 study of more than 6,000 IPO registrations found that, among newly public firms, stock-paid acquisitions underperformed cash deals by 20 to 30 percentage points over three to five years.

The upside is also real. Our best outcome, not a typical one, went public with about $1.5 million of revenue at a $3.5 million starting valuation and was sold seven years later for $240 million in cash.

Where these numbers come from: GF Data medians via Carry and Conquer; SDE multiples and the SDE to EBITDA switch from Beancount's analysis of BizBuySell data; HVAC practitioner estimates from Beancount's HVAC guide; Castellum from jwatte.com; the stock-deal study from the CLS Blue Sky Blog. Subsidiary earnings, overhead and debt in the example are assumptions.

Related questions

What valuation should I use when raising money for a holding company?

Investors will start near the sum of the parts and pay toward the consolidated value only for evidence you can integrate. Show both calculations, and show what has to be true for the higher one.

Should the parent's overhead reduce the valuation?

Yes. A buyer of the group pays for the parent's costs too. Overhead is worth carrying only if it produces more value through better buying, integration or financing.

Do unrelated businesses lower a holding company's value?

They usually limit it to the sum of the parts, because they share little. Some owners accept that for diversification. Do not expect a platform multiple for a collection.

What comes next

The platform premium depends on people more than structure, which starts with the board and advisers: Who should be on a holding company's first board and advisory team?

Related articles

• What is a holding company and what does it do?
• What are the pros and cons of a holding company?
• What is multiple arbitrage and how do roll-ups create value?
• Public roll-up vs private roll-up: how does the math compare?
• How do you build a holding company for acquisitions?

• What is ROIC (or ROTIC), and why do serial acquirers obsess over it?

Meraki Dealmakers is a service of Meraki Partners, LLC, an advisory firm. It is not a broker-dealer, investment adviser, business broker, law firm or accounting firm. This article is general information, not legal, tax or investment advice.