easy · Investment Banking valuation-core
When performing a Precedent Transactions analysis, why might the resulting multiples be significantly higher than those found in a Comparable Companies analysis for the same target?
- Trading comps use LTM metrics while precedents use forward estimates
- Public markets are generally less efficient than private M&A negotiations
- Precedent transactions are inherently more accurate as they reflect historical facts
- Precedent transactions incorporate a control premium and expected synergies
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