Series 79: Precedent Transactions Analysis

Taken from our FINRA Investment Banking Exam

Definition of the term Precedent Transactions Analysis...

a relative valuation method in which past mergers and acquisitions are used to estimate an appropriate price for a prospective merger or acquisition. The precedent transactions are used to estimate an appropriate valuation multiple for the prospective transaction. Unlike comparable companies analysis, precedent transaction analysis produces a valuation that includes a control premium. Also called comparable transactions analysis.

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