Precedent Transactions Analysis is a financial valuation method used to assess the value of a company by examining past transactions involving similar businesses. This approach involves analyzing the prices paid for comparable companies in mergers and acquisitions, allowing analysts to identify trends and establish a valuation range based on historical data.
The analysis typically considers various factors, such as the size of the companies, industry, and market conditions at the time of the transactions. By comparing these elements, investors and financial professionals can gain insights into what buyers have been willing to pay, helping to inform their own valuation decisions.