Series 79: Chapter 3

Chapter 3

Analysis of Trends in Precedent Transactions

Investment bankers look at precedent transactions primarily as a source of information to be used for valuation (and evaluation) of a company in light of a contemplated transaction. Precedent transactions analysis is useful for several other purposes, however, including discerning trends in capital raising and mergers and acquisitions. In other words, if you look at enough precedent transactions over time, you will begin to notice that the use of certain structures and techniques waxes and wanes over time. In particular, new trends—or the resumption of old trends that have been out of favor—frequently become apparent in the course of analyzing precedent transactions.

It is important to be aware of these trends, not for the sake of being trendy, but because trends emerge when bright minds start thinking about how to accomplish certain goals in light of existing market conditions. Some of these t