Are Past Transactions Involving a Company’s Stock Important Considerations in Business Valuation?

A very useful, but sometimes overlooked market approach method is the analysis of past transactions involving the subject company. There are at least three groups into which these transactions

can be classified:

1. Acquisitions made by the subject company (treasury stock, for example)
2. Past changes of a controlling ownership in the subject company
3. Past transactions in minority ownership interests in the subject company

It is important to determine that the transactions falling into one of the three groups were transactions negotiated at arm’s length (said transaction was negotiated by parties, each acting in his or her own best self interest).

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