Series 79 practice questionmediumPrecedent Transaction Analysis
Which of the following would most likely lead to a higher control premium in a precedent transaction analysis?
- AA target company with stagnant revenue growth
- BA target company with dispersed share ownership and attractive strategic assets✓ Correct answer
- CA target with significant contingent liabilities
- DA transaction during a bear market
Explanation
Why B — A target company with dispersed share ownership and attractive strategic assets
A company with dispersed ownership and strategic assets is attractive to acquirers, typically yielding higher control premiums. Ignoring ownership structure or liabilities can lead to misjudging premium levels.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 995+ Series 79 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Collection, Analysis & Evaluation of Data questions
- When constructing an unlevered free cash flow forecast, which of the following is typically subtracted from EBIT after…
- In a DCF, which of the following is a valid reason to apply the mid-year convention when discounting unlevered free…
- A company reports a one-time gain from the sale of a division, inflating its net income. When calculating adjusted…
- When calculating terminal value in a DCF using the perpetuity growth method, which input is typically the most…
- Which of the following adjustments must be made to equity value to arrive at enterprise value if a company has a…
- In assessing a company’s liquidity, which metric best reflects the speed at which it can convert assets into cash…
- A banker is constructing a set of precedent transactions but notices that one deal was for a company in bankruptcy. How…
- While performing a comparable company analysis, you encounter two outliers in the EV/EBITDA multiple set: one company…