What unique insight does transaction comps provide that trading comps do not?

What unique insight does transaction comps provide that trading comps do not?

• A. Dividend yields
• B. Purchase premiums in a transaction
• C. Current market price of peers
• D. Debt levels

Answer: (B)

Transaction comps reveal the premium buyers actually paid to acquire a target, i.e., the control or purchase premium included in deal pricing. This reflects what willing acquirers have historically valued above the target’s standalone market value, incorporating terms like how the deal is financed and potential synergies. Trading comps look at current stock prices of peers and thus capture market pricing, not the extra amount paid to gain control. Dividend yields, current market prices, and debt levels are observable in public markets or balance sheets, but they don’t show the deal-specific premium that only transaction-based analysis provides.

Transaction comps reveal the premium buyers actually paid to acquire a target, i.e., the control or purchase premium included in deal pricing. This reflects what willing acquirers have historically valued above the target’s standalone market value, incorporating terms like how the deal is financed and potential synergies. Trading comps look at current stock prices of peers and thus capture market pricing, not the extra amount paid to gain control. Dividend yields, current market prices, and debt levels are observable in public markets or balance sheets, but they don’t show the deal-specific premium that only transaction-based analysis provides.