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Why does a precedent transactions analysis typically produce a higher valuation than trading comparables?

  1. A It includes a control premium paid to acquire the whole company
  2. B It uses older data
  3. C It excludes debt
  4. D It uses different multiples
Answer

It includes a control premium paid to acquire the whole company

Acquirers pay above the market price to obtain control and expected synergies, which trading multiples of minority stakes do not reflect.

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