Transaction Comparables Main Terms Calculating Multiples

Transaction Comparables

Like trading comps, transaction comps (or precedent transactions) is a relative valuation methodology and determines how much an acquirer has paid for a target company. The price paid is measured and represented by a multiple.

As a simple example, Tata acquired Corus at GBP 6.08 per share. This implies:

  • An Enterprise value of GBP 6.6 billion and
  • A multiple of 9.0x LTM EBITDA

In the future when an acquirer is evaluating an offer for a steel company in Europe or another developed economy, they will take into consideration that Corus was acquired at a multiple of 9.0x LTM EBITDA. Deals done in a particular sector become a benchmark for future transactions.