5.1·5 min read
Deal Comps
Precedent transactions value a company off the multiples paid in comparable past acquisitions, which tend to run higher than trading comps.
By the end you can
- ✓Define precedent transaction analysis
- ✓Explain why deal multiples exceed trading multiples
Precedent transaction analysis
A relative-valuation method that applies the multiples paid in comparable past M&A deals to the target - what acquirers actually paid, rather than where companies trade.
Deal comps usually run higher
Acquirers pay a premium over the unaffected trading price to win control and capture , so transaction multiples are typically higher than trading-comp multiples. That makes them a useful read on a likely takeover price.
Check yourself
Precedent transaction multiples are usually: