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Transaction Comps Exam Questions And
Answers 2025 Update.
Transaction comps - Answer✔Looks at what similar companies to what we are trying to value,
that have already been acquired
What is a premium in transaction comps and why do we look at averages for premium? listing
price 1 million and final offer 1.2 million - Answer✔When the final offer is larger than listing
price, so 1. = 20% premium. And we look at premiums over periods of time because there
can be externalities if we choose one day leading to not normal premium numbers
What time frame do transaction comps always use for multiples and for percentage premium
pay? - Answer✔LTM and NTM, with 1 day 7 days or 30 days for percentage premium pay
Amongst three different times of valuation methodologies? - Answer✔Almost always
transaction comps gives us a higher multiple than trading comps because of control premium
What is control premium? and reasons why a company might pay it - Answer✔The premium
paid over the market worth of the company to gain control of the company (50% share
increase)
reasons:
1. competitive process
2. company is a strategic asset in the industry
3. by acquiring a competitor, market becomes less competitive
4. buyer values company more than others
5. to fight larger companies, a company may pay a premium to buy another small competitor to
shield themselves
6. Synergies that a company is expecting to gain
Explain synergies - Answer✔Synergies are when two companies combine and become greater
than separate. 1 + 1 > 2
1
Transaction Comps Exam Questions And
Answers 2025 Update.
Transaction comps - Answer✔Looks at what similar companies to what we are trying to value,
that have already been acquired
What is a premium in transaction comps and why do we look at averages for premium? listing
price 1 million and final offer 1.2 million - Answer✔When the final offer is larger than listing
price, so 1. = 20% premium. And we look at premiums over periods of time because there
can be externalities if we choose one day leading to not normal premium numbers
What time frame do transaction comps always use for multiples and for percentage premium
pay? - Answer✔LTM and NTM, with 1 day 7 days or 30 days for percentage premium pay
Amongst three different times of valuation methodologies? - Answer✔Almost always
transaction comps gives us a higher multiple than trading comps because of control premium
What is control premium? and reasons why a company might pay it - Answer✔The premium
paid over the market worth of the company to gain control of the company (50% share
increase)
reasons:
1. competitive process
2. company is a strategic asset in the industry
3. by acquiring a competitor, market becomes less competitive
4. buyer values company more than others
5. to fight larger companies, a company may pay a premium to buy another small competitor to
shield themselves
6. Synergies that a company is expecting to gain
Explain synergies - Answer✔Synergies are when two companies combine and become greater
than separate. 1 + 1 > 2
1
