Precedent Transactions

Valuation based on prices paid in past M&A deals for comparable companies.

Precedent transactions (precedent M&A, transaction comps) values a company based on prices paid in actual M&A deals for similar companies. Unlike trading comps (which reflect minority stake, public market valuations), precedent transactions include a control premium—the extra amount acquirers pay for 100% ownership and strategic value. Methodology: Find recent deals (last 2-3 years) in the same sector. Calculate EV/EBITDA, EV/Revenue paid. Apply those multiples to your company. For example, if recent deals traded at 12x EBITDA and your target has $100M EBITDA, implied EV ≈ $1.2B. Control premium: Typically 20-40% above trading price. Use in M&A: Establishes floor valuation for acquisition bids. Limitations: Every deal is unique (synergies, timing, strategic fit), market conditions change.