Date of Submission
Campus Only Senior Thesis
Bachelor of Arts
Professor George Batta
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.
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.
This thesis is restricted to the Claremont Colleges current faculty, students, and staff.