All of the following are weaknesses of a precedent transactions analysis EXCEPT:
A)Multiples may be skewed, depending on the economic environment
B)Precedent transactions by definition have occurred in the past, and may not be reflective of the current environment
C)A precedent transactions analysis makes too many assumptions about future performance
D)Information may be insufficient to determine transaction multiples for many comparable acquisitions.

Question

Quizplus · Accepted Answer

A precedent transactions analysis does not make too many assumptions about future performance as it is based on actual past transactions. A weakness of this analysis is that multiples may be skewed depending on the economic environment, precedent transactions have occurred in the past and may not be reflective of the current environment, and information may be insufficient to determine transaction multiples for many comparable acquisitions.

All of the Following Are Weaknesses of a Precedent Transactions