Why might trading comps and precedent transaction comps give different values?
Model answer
Precedent transactions usually price higher because they include a control premium (paying for 100% ownership) and potential synergies, and they reflect market conditions at the time of each deal. Trading comps reflect minority, public-market prices today. Precedents are also harder to compare due to varying deal dynamics and dated data.
⚠ Common wrong answer: "Trading comps are usually higher because they reflect current prices, while old deals are stale." Why it fails: The systematic gap runs the other way: deal prices embed a CONTROL premium and synergy value, so precedents typically print above trading comps. Staleness adds noise in both directions; it does not set the ordering.
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More from Valuation: Comps & Precedents
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