Transaction Multiples
Short definition
Transaction multiples are turns taken from completed M&A prices. Control premium and expected synergies are embedded; they sit above trading multiples.
Detailed explanation
The deal date, cycle and competitive tension break comps. EV is backed out on a cash-free debt-free definition. An old deal does not speak to today’s WACC and margin.
Few deals mean a wide range. Hidden earn-outs leave the multiple short.
Why it matters for the CFO
For a control price and fairness this set beats trading. Bridge effects and bargaining share must be split out.
How to read it
Deals 9x, trading 7x: a 2-turn premium. Paying that premium with no synergy is a value transfer.
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Definitions are educational. They are not investment, credit or tax advice.