General Studies · Corporate Valuation
Why are transaction multiples observed in 'Precedent Transactions' typically higher than trading multiples from 'Public Comps'?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Transaction multiples include future synergies but public trading multiples never do
- 2Publicly traded companies are universally undervalued by the stock market
- 3Acquirers pay a 'Control Premium' to gain a controlling stake and synergies in the target company✓
- 4Precedent transactions strictly use LTM figures while public comps use NTM figures
Correct answer
Acquirers pay a 'Control Premium' to gain a controlling stake and synergies in the target company
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