BIWS chapter 2 Exam Questions with Correct Answers| New Update 100% Verified by Experts
what is precedent transaction analysis similarly to comps, you use multiples from a comp
universe to create implied value for the target. However, rather than taking figures on firms
now - you take it from similar firms who have had recent M&A transactions.
wouldn't that be much smaller True but bankers will base it of similar characteristics
- share similar customers (end markets/distribution).
- similar time period
-similar buy/sell structure.
why should you do it then comp analysis will not capture the control premium, companies
who are willing to pay more so that they can takeover and make areas more efficient to yield
greater return.
You also get to see how these transactions were structured.
You get an understanding of why the business was bought and how.
why are PT multiples higher control premiums - companies value synergies and are willing to
pay more to take control and fix the ineffeciencies to establish better value later
on.inefficiencies
how to screen for previous M&A deals search SIC codes for recent transactions in a sector
Look at targets M&A history for previous multiples
Look at M&A history for comp.
Equity research reports for recent M&A
what should you detail when looking at those deals CONTEXT. understand what the market
conditions were, for the overall market/sector/business. Look at who bought/sold and
why/how
what is precedent transaction analysis similarly to comps, you use multiples from a comp
universe to create implied value for the target. However, rather than taking figures on firms
now - you take it from similar firms who have had recent M&A transactions.
wouldn't that be much smaller True but bankers will base it of similar characteristics
- share similar customers (end markets/distribution).
- similar time period
-similar buy/sell structure.
why should you do it then comp analysis will not capture the control premium, companies
who are willing to pay more so that they can takeover and make areas more efficient to yield
greater return.
You also get to see how these transactions were structured.
You get an understanding of why the business was bought and how.
why are PT multiples higher control premiums - companies value synergies and are willing to
pay more to take control and fix the ineffeciencies to establish better value later
on.inefficiencies
how to screen for previous M&A deals search SIC codes for recent transactions in a sector
Look at targets M&A history for previous multiples
Look at M&A history for comp.
Equity research reports for recent M&A
what should you detail when looking at those deals CONTEXT. understand what the market
conditions were, for the overall market/sector/business. Look at who bought/sold and
why/how
