Why do precedent transactions usually give higher valuations than comps?

The main reason is control. A share price in the public market reflects what investors pay for a small minority stake. In an acquisition, the buyer is purchasing the entire company and gains control of its strategy, cash flows and assets, so it has to pay a premium over the current share price to convince shareholders to sell.

Two other factors push the price higher. Strategic buyers often expect synergies, such as cost savings from combining operations, and in a competitive deal they end up paying part of that value to the seller. And sell-side processes are often auctions, where several bidders compete for the asset.

There are exceptions. Precedent transactions happened at different points in the market cycle, so deals done in a weak market can show lower multiples than today's trading comps. Precedent data is also harder to work with: deals may be years old, private targets disclose limited financials, and each deal has its own circumstances. That is why I treat precedents as one input in a valuation and explain which deals are most relevant rather than taking a simple median.