Which valuation method would typically use historical acquisition prices to assess value?

The method that typically uses historical acquisition prices to assess value is Precedent Transactions Analysis. This approach is grounded in the examination of previous transactions that involved companies with similar characteristics, size, and market conditions. It focuses on the prices paid in past acquisitions to establish a valuation benchmark for the company being evaluated.

By analyzing these historical acquisition prices, which reflect the actual amounts that acquirers were willing to pay for similar businesses, this method provides insight into current market trends and investor sentiment regarding valuations in that specific industry. This can help to predict how much a buyer might pay for the company in question based on what others have been willing to pay for similar assets in the past.

In contrast, other valuation methods do not primarily focus on historical acquisition prices. For instance, Comparable Companies Analysis looks at publicly traded company multiples, while Sum-of-the-Parts Valuation assesses different business segments individually. Liquidation Valuation calculates the net cash that could be obtained if the company's assets were sold off. Each of these approaches serves different purposes and relies on different types of data and assumptions, making Precedent Transactions Analysis uniquely suited to utilize historical acquisition prices.