easy · Investment Banking valuation-core
A target company is trading at an EV/EBITDA multiple of 8.0x. In a recent precedent transaction, a similar peer was acquired at a 10.5x multiple. The peer had a similar growth and margin profile.
What is the most likely reason for this discrepancy?
- The peer in the transaction had a higher tax rate.
- The precedent multiple includes a control premium and expected synergies.
- The target has higher leverage than the peer in the transaction.
- Public markets are always more efficient at valuing businesses than private acquirers.
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