What kind of multiples are calculated during a Precedent Transaction Analysis?

The correct answer highlights the use of trading multiples based on financial statistics in Precedent Transaction Analysis. This form of valuation involves analyzing past transactions of similar companies to determine a fair value range for the company under consideration.

In this context, trading multiples are derived from comparable companies and are used to evaluate how similar businesses are valued in the market. Common multiples considered in this analysis include Enterprise Value (EV) to Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), EV to Sales, and others that reflect operational performance and financial metrics. These multiples are crucial because they provide insight into how the market is pricing similar businesses based on their financial statistics.

By using these multiples, investment bankers can ascertain an appropriate valuation of the target company compared to past transactions in the market. This method is beneficial because it incorporates market conditions and buyer motivations at the time of the transactions, enabling better-informed decision-making.

The focus on trading multiples aligns closely with the quintessential nature of Precedent Transaction Analysis, which is to replicate the market-derived valuations seen in actual transactions involving similar companies.