Precedent transactions

Precedent transactions look at completed deals rather than daily share prices. The question is what someone was willing to pay to own the whole of a business like this one, which makes it the most relevant method when your company is itself an acquisition candidate.

They almost always come out highest, and the reason is control. A buyer of the whole company gains the right to direct it, and often expects synergies no passive shareholder could realise, so it pays a premium over the traded price. That gap is information, not an error.

They are harder to build than trading comps. Deal data is patchy for private targets, the multiple depends on financials at the time that may never have been public, and every deal carries its own circumstances: a competitive auction, a distressed seller, a strategic buyer with a unique reason to stretch.

Age matters more than in trading comps. A multiple paid three years ago reflects the credit conditions and sector sentiment of three years ago, so a set spanning a cycle needs either a tight time window or an explicit argument for why older deals still apply.