Precedent transactions
What buyers have actually paid, control premium and all.
Comparable companies tell you what the market pays for a minority stake you can sell tomorrow. Precedent transactions tell you what an acquirer paid to own the whole thing, with the synergies they expected and the competitive pressure of an auction baked in. That difference (the control premium) is why precedent multiples sit above trading multiples, usually by 20–40%. The method's weakness is the mirror of its strength: every data point is historical, struck in a specific financing and regulatory environment that may no longer exist.
What this course covers
- 01Define the screen
- 02Reconstruct each deal's enterprise value
- 03Pair with the correct financials
- 04Record the context, not just the multiple
- 05Apply with judgement
What you will be able to do
- Advising a board on what a sale process might realistically achieve
- Setting the upper end of a valuation range, where trading comps set the lower
- Sectors with frequent M&A and disclosed deal terms
- Fairness opinions, where the standard is what a buyer would pay for control
Where it does not apply
- Sectors with few transactions, where the sample is too small to be meaningful
- Periods when financing conditions have changed sharply since the deals were struck
- Valuing a minority stake, where no control premium is being paid
- Where reported deal values are unreliable: private deals with undisclosed earn-outs and rollover equity
How this prepares you for the assessment
This is one of 17 courses, and none of them is required for the Verified Valuation Assessment. The credential is earned on two timed drills, graded by the same engine that checks this course, and the drill score decides what it says you are capable of, from Foundation through to Distinction.
- Distinction90%+Works independently across all three core methods.
- Merit75%+Builds the core models with limited supervision.
- Pass60%+Understands the mechanics; works through a model with guidance.
- FoundationcompletedKnows the vocabulary and the shape of each model.