Yes — valuations derived from Transaction Comparables are often higher than those based on other methods, such as Trading Comparables.
This trend is driven by several factors unique to the nature of M&A transactions:
1. Strategic Synergies
Buyers, especially strategic acquirers are often willing to pay a premium because they expect to realise benefits from the acquisition, such as:
Cost savings through economies of scale
Revenue growth via cross-selling or market expansion
Operational efficiencies or technology integration
These anticipated benefits are not reflected in standalone valuations, which typically assess a business as-is.
2. Control Premiums
Many transactions involve the sale of a controlling interest in a company. Buyers often pay extra for this level of control, leading to a control premium being built into the transaction price and therefore into the multiples.
3. Private Company Focus
Transaction Comparables are typically based on private company sales, which tend to reflect more specific deal dynamics, sector nuances, or buyer motivations compared to public market data. This context-driven approach often results in higher multiples and valuations.