Graduation Year
2018
Date of Submission
4-2018
Document Type
Campus Only Senior Thesis
Degree Name
Bachelor of Arts
Department
Economics
Reader 1
Professor George Batta
OCLC Record Number
1097357160
Abstract
Over the last twenty years, the worldwide number of public mergers and acquisitions has grown at a compound annual growth rate of 3.3%. In each transaction, acquirers and valuing parties including corporations, investment banks, and buyout funds value target firms using a variety of methodologies. This paper provides evidence in favor of trailing twelve months percent revenue growth as a multiple for valuation. Using the last twenty years of public mergers and acquisitions available on S&P’s Capital IQ, this paper finds that revenue growth is a consistently significant predictor of a target firm’s purchase multiple, measured as its enterprise value divided by revenue. Further, this paper finds no evidence that trailing twelve months percent revenue growth is more significant during economic bubbles, and that the effect is largely mitigated within the technology sector.
Recommended Citation
Bunce, Victor, "Does Growth Drive Valuation? An Analysis of Percent Revenue Growth as a Multiples-Based Valuation Method in Public Mergers and Acquisitions" (2018). CMC Senior Theses. 1980.
https://scholarship.claremont.edu/cmc_theses/1980
This thesis is restricted to the Claremont Colleges current faculty, students, and staff.
