What is the definition of Precedent Transactions?

Precedent transactions are one part of the comparative analysis. It is the analysis of previous transactions which have taken place involving companies of similar market cap/revenue/location/industry to the company being valued. The idea being that similar companies should be traded at similar multiples, so if you can find out what multiples similar companies have been sold/purchased at, you can apply an average of those multiples to the company and approximate a valuation.

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