Transaction multiples using FactSet
I've looked up transactions in FactSet for a precendent transactions analysis. It gives me a "Transaction value" and an "Enterprise value". I've always thought transaction value was enterprise value. But they are different for many transactions. Can anyone explain the difference!
Many thanks.
Which one is large? Are these public companies or private transactions?
Isn't transaction value the 'purchase price' which factors in average working capital etc.
Don't think too much about it, remember fundamental inputs, for ex; intangible assets, deferred revenue, deal premiums, interest rates, inflation, economic climate etc...
The transaction value and enterprise value will only reliably be the same for very recent valuations or deals. These variables typically don't change radically over a short period too often.
does it depend on the % stake bought in the transaction as well?
According to FactSet's methodology:
Transaction value = the value of what is acquired (based on % sought), including net debt if it is a change-of-control/full company acquisition (e.g. if the acquirer owns 100% of shares post-acquisition) EV = implied TEV on a 100% basis. This will also include other EV adjustments that transaction value will not (e.g. preferred stock)
For example, lets say a company has 10 shares, $100 of net debt, and we're looking at a 25% acquisition of the company's stock (2.5 shares) at $10 per share.
Under "Transaction Value" this would show $25 (2.5 shares x $10/share, or $100 total equity value x 25%) and exclude net debt since it is not a change-of-control.
Under "Enterprise Value" this would show the implied TEV, which is $200 ($100 implied 100% equity value + $100 of net debt)
Another reason is if only part of the company is acquired - transaction value will only reflect the % of the company being purchased. At least that's how it is on CapIQ, not sure about Factset.
Edit: Just read Valk's response lol
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