Comparable transactions

<h2 id="example">Example</h2>
<p>In 2010, <a href="/facts/Providence_Equity_Partners/Uy9a63UN">Providence Equity Partners</a> acquired Virtual Radiologic Corporation, which is an online clinic that provides radiologist analysis through a virtual network. It was sold for a price of  million and an <a href="/facts/Enterprise_Value/Rt3XWJXQ">enterprise Value</a> of $242 million.<a class="footnote-ref" id="fnref:3" href="#fn:3"><sup>3</sup></a> To evaluate a similar unsold company, we would look at what are called the transaction multiples. 
</p><p>One popular transaction multiple is <a href="/facts/EV%2fEBITDA/lJo01kL0">EV/EBITDA</a>. For Virtual Radiologic Corporation, the EBITDA at the time of the transaction was $20 million, giving an EBITDA multiple of 12.1x. A similar unsold company, which has EBITDA at $10 Million could expect to be sold for $120 million. In some market segments, the companies do not have high EBITDA, and sometimes a multiple based on revenues (<a href="/facts/EV%2fsales/muYCt9KE">EV/sales</a>) is used instead. To get a more accurate valuation, one should look at the multiples of more than one similar deals that are relatively recent since multiples do change from year to year.
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<h2 id="references">References</h2>

<ol>
<li id="fn:1"><p>"Comparable Company Analysis (CCA): How Is It Used in Investing?". Investopedia. March 19, 2020. <a href="https://www.investopedia.com/terms/c/comparable-company-analysis-cca.asp" target="_blank">https://www.investopedia.com/terms/c/comparable-company-analysis-cca.asp</a> <a href="#fnref:1" class="footnote-back-ref">↩</a></p></li>
<li id="fn:2"><p>"Mergers Acquisitions - Glossary - Comparable Transaction Analysis". mergers-acquisitions.org. Archived from the original on July 27, 2011. <a href="https://web.archive.org/web/20110727081052/http://www.mergers-acquisitions.org/glossary/term/167" target="_blank">https://web.archive.org/web/20110727081052/http://www.mergers-acquisitions.org/glossary/term/167</a> <a href="#fnref:2" class="footnote-back-ref">↩</a></p></li>
<li id="fn:3"><p>"Virtual Radiologic announces its acquisition for $294 million". Diagnostic Imaging. May 17, 2010. <a href="https://www.diagnosticimaging.com/view/virtual-radiologic-announces-its-acquisition-294-million" target="_blank">https://www.diagnosticimaging.com/view/virtual-radiologic-announces-its-acquisition-294-million</a> <a href="#fnref:3" class="footnote-back-ref">↩</a></p></li>
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Comparable transactions open-in-new

Comparable transactions