Valuation: Comps & Precedents
What is precedent transactions analysis and what is the core idea behind it?
Model answer
Precedent transactions (a.k.a. transaction comps or M&A comps) value a company based on multiples paid in past acquisitions of similar companies. The core idea: a buyer recently paid X times EBITDA…
The full, human-reviewed answer is in the bank.
Sign up free and Daily 10 serves you 10 questions a day from all 1,500+ — or go Pro for unlimited reps.
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.