You are assessing a potential acquisition for a client and your analyst informs you that the…

You are assessing a potential acquisition for a client and your analyst informs you that the historic EBITDA multiple based on Public Comparables is 5.8 and the historic EBITDA multiple based on Precedent Transactions is 7.3. If the target is expecting EBITDA of $90 million, what are the valuations under each method? Can you rationalize the difference between the two?

 

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