Precedent Transactions - Transaction Value or Implied EV?
When looking at transactions in CapIQ to do a precendent transactions analysis, do most people use the "transaction value" or the "implied enterprise value" they list to do the multiples analysis?
For example:
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Consideration to Shareholders ($ mm) 7,160.15
Other Consideration ($ mm) -
Total Earnouts ($ mm) -
Total Rights/Warrants/Options ($ mm) -
Net Assumed Liabilities ($ mm) 21.6
Adjustment Size ($ mm) -
Total Net Transaction Value ($ mm) 7,181.75
Total Cash & Short Term Investments ($ mm) 578.40
Total Gross Transaction Value ($ mm) 7,760.15
% Sought 100.0%
Implied Enterprise Value ($ mm) 7,181.75
Implied equity value ($ mm) 7,160.15
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The difference between the two numbers is the "cash & short term investments" of $578.40, but CapIQ uses this gross transaction value including the cash for "transaction size".
For implied EV, wouldn't you need to subtract this cash number from debt (assumed liabilities) to get net debt to add to equity value (consideration to shareholders)? Doesn't seem like their implied EV or net transaction value (same number) does this calculation.
We typically look at transaction value because that's what actually occurred - implied EV is just a calculation at the end of the day.
Then again, I use FactSet...
I would just use CapIQ formulas building up from first principles. Start with consideration: Offer price (input) x Shares on issue as at the date of the transaction CIQ(TICKER,"IQ_SHARESOUTSTANDING", "date on announcement") + Net debt CIQ(TICKER,"IQ_NET_DEBT") = Implied EV.
Then you can use forward EBITDA, EBIT to get transaction EV/EBITDA and EV/EBIT. You can also use the Implied Equity value (offer price x shares on issue) divided by forward NPAT to get the transaction PE.
Deal Value = amount Paid Eq Value = Deal Value/% acquired (100%) Net Debt= Net Assumed Liabilities Implied EV= Eq Value + Net Debt which already takes into account Cash
In order to get the gross transaction value it takes cash out (adding it)
When doing transaction multiples you derive EV and look for EBITDA or another industry measure (MW in Utilities) to get a multiple which then is used to value your company.
I use mergermarket for the deal size and source the other info from the target company or press releases
Very helpful - thanks for the responses everyone.
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