Lifesaver Inc., a producer of personal protective equipment, trades on the TSX Venture stock exchange at an EV/EBITDA multiple of 4.0x. From performing a precedent transaction analysis, you note that recent acquisitions of similar companies have transacted at an EV/EBITDA multiple of 6.0x. The following is not a valid potential reason for this discrepancy: -Since buying Lifesaver Inc. shares on the TSXV does not likely result in obtaining control of the company, the stock trades at a discount to the multiple implied by the recent acquisitions. -Special purchaser considerations, such as synergies, being inherent in the precedent transaction multiples. -Multiples implied by precedent transactions are not relevant when considering publicly traded companies. -The presence of a control premium within the EV/EBITDA multiple implied by the acquisitions

Lifesaver Inc., a producer of personal protective equipment, trades on the TSX Venture stock exchange at an EV/EBITDA multiple of 4.0x. From performing a precedent transaction analysis, you note that recent acquisitions of similar companies have transacted at an EV/EBITDA multiple of 6.0x. The following is not a valid potential reason for this discrepancy: -Since buying Lifesaver Inc. shares on the TSXV does not likely result in obtaining control of the company, the stock trades at a discount to the multiple implied by the recent acquisitions. -Special purchaser considerations, such as synergies, being inherent in the precedent transaction multiples. -Multiples implied by precedent transactions are not relevant when considering publicly traded companies. -The presence of a control premium within the EV/EBITDA multiple implied by the acquisitions

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter23: Corporate Restructuring

Section: Chapter Questions

Problem 3P

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