Precedent transactions refer to past deals or acquisitions that serve as benchmarks for valuing similar companies or assets. By analyzing these transactions, financial analysts can determine a fair market value based on what others have paid in comparable situations. This method is commonly used in investment banking and corporate finance. These transactions often involve similar industries, company sizes, and market conditions. Key metrics, such as purchase price, earnings before interest, taxes, depreciation, and amortization (EBITDA), and revenue multiples, are examined to provide insights into valuation trends. This helps investors and companies make informed decisions during mergers and acquisitions.