Series 79 practice questioneasyPrecedent Transaction Analysis
Which of the following is most often considered a reason to exclude a precedent transaction from a comparable set?
- AThe deal was announced in the current year
- BIt involved a friendly merger
- CThe target was in bankruptcy at the time of sale✓ Correct answer
- DA public buyer acquired a private company
Explanation
Why C — The target was in bankruptcy at the time of sale
Distressed or bankruptcy transactions are often excluded since their terms can distort typical multiples. Including such deals can understate value and mislead benchmarking analyses.
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