FIN4610908 - 9/8/11 FIN 461 TransComps Pro/Con Pro: market...

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9/8/11 FIN 461 TransComps Pro/Con Pro: market based, current, relativity, simplicity, objectivity Con: Market based, time lag, absence of comps, availability of info, acquirers basis for valuation Normal market conditions, TransComps tend provide a higher multiple range than TransComps TradeComps 9-11x (EV/EBITDA) TransComps 11-13x Transactions valuations higher because of: - control premium - syngergies Finding comparable acquisitions: M&A databases: SDC , Capital IQ, FactSet Mergerstat SIC: Standard Industrial Classification…industries by 4-digit number, regulated by government If code beings with: 6 financial firm 67 financial firm that’s an investment company The more “digits match” then the better comparable Sort transactions by SIC code Target firm’s M&A history source of comparables - Key transaction data: price, form of consideration, key financial statistics - Calculate multiples on the basis of actual LTM financial statistics (like TradeComps) - Multiples often reflection control and or synergy premiums
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This document was uploaded on 11/02/2011 for the course FIN 461 at Miami University.

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FIN4610908 - 9/8/11 FIN 461 TransComps Pro/Con Pro: market...

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