Precedent transactions value a company by what buyers paid for similar ones. Two numbers come out of each deal:
- EV / EBITDA paid: enterprise value over the target's last twelve months (LTM) of EBITDA.
- Premium: offer price / undisturbed share price - 1. Buyers pay a premium for control, so precedent multiples usually sit above trading multiples.
The undisturbed price is the price before news or rumors of a deal moved it, often a few weeks before the announcement. The price the day before can already include the rumor, which makes the premium look smaller than what the buyer paid for control.
Old deals mislead. Markets and multiples move, so most analysts keep only recent deals, often the last five years. A flag column with EDATE, =IF(B6>=EDATE($B$3,-60),1,0), keeps the cut-off in one place, and a helper column of multiples for flagged deals lets MEDIAN ignore the rest.