Series 79 practice questionmediumPrecedent Transactions - Data Challenges
Which challenge is most commonly encountered when using precedent transactions for valuation?
- ALack of sufficient historical data and disclosure✓ Correct answer
- BMultiples are always lower than comps
- CTargets are always private companies
- DTransaction size is always identical
Explanation
Why A — Lack of sufficient historical data and disclosure
Precedent transaction data can be sparse, especially for private deals or old transactions. Multiples are not always lower than comps; targets are not always private, and transaction size varies.
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