Valuation: Comps & Precedents
A precedent transaction closed in a frothy M&A market two years ago at 14x EBITDA, but markets have since corrected sharply. How do you treat it in your analysis?
Model answer
Flag it as a less-comparable, environment-distorted data point. The 14x reflects peak credit availability and competitive sponsor bidding that no longer exist, so it likely overstates what a buyer…
The full, human-reviewed answer is in the bank.
Sign up free and Daily 10 serves you 10 questions a day from all 2,300+ — or go Pro for unlimited reps.
Pro unlocks every model answer — $19.99/mo.
More from Valuation: Comps & Precedents
- What are the main valuation methodologies?
- Why might trading comps and precedent transaction comps give different values?
- Why is EV/EBITDA often preferred over P/E for comparing companies?
- What are the three primary valuation methodologies a banker uses, and in one line each, what is each based on?
- Which of the standard valuation methodologies tend to produce the HIGHEST and the LOWEST values, and why?
- Walk me through how you perform a comparable companies analysis.
Try the real thing
1 / 3Valuation: Comps & Precedents
Why might trading comps and precedent transaction comps give different values?
Superday coming up? Take the cheat sheet.
The technicals and stories to have cold before you walk in — free, one email, no mailing list.
Free tier: 20 cards + 10 daily reps + ALL drills — no credit card required.