What is a reason Precedent Transactions often exhibit more variability than Public Comps?

Precedent transactions typically exhibit more variability than public comps because they depend on different circumstances surrounding each deal. Each acquisition or merger has unique aspects, such as the strategic rationale behind the transaction, the negotiation dynamics, the financial health of the companies involved at the time of the deal, and the market conditions prevailing when the transaction occurred. These factors can significantly influence the valuation multiples that emerge from these transactions.

In contrast, public company comparables use a more standardized approach, focusing primarily on current market valuations of companies in similar sectors. Since these valuations are based on real-time trading data and are affected by a consistent set of market dynamics, public comps tend to show less variability compared to the diverse and often more complex scenarios seen in precedent transactions.

The other choices, while they may have some relevance in certain contexts, do not accurately capture the primary reason for the greater variability in precedent transactions compared to public comps.