Valuation

Precedent-Transaction Analysis

Definition

What is Precedent-Transaction Analysis?

Valuing a business using prices paid in comparable past acquisitions.

Example in practice

Recent bank takeovers provide reference acquisition multiples.

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The price at which an asset could trade in the market at a given time.

An estimate of an asset's underlying economic worth based on expected cash flows, assets, or earning power.

An estimate of an asset's appropriate value under specified assumptions or accounting standards.

Present value of expected cash inflows minus present value of expected cash outflows.

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