Module II· Precedent TransactionsBasic
Question
What is the difference between precedent-transaction multiples and trading-comps multiples?
Answer
Key difference
Precedents include a control premium: the markup for acquiring control (typically 20–35%). Trading Comps reflect minority investments without control.
Consequence
Precedent multiples are typically 20–40% above Trading Comps.
When to use which
- M&A valuation → Precedents (acquisition pricing)
- Equity valuation for public investors → Trading Comps
Pitfall
Mixing the two without context — a senior will immediately ask why precedents are 12x and trading is 9x.