Which statement about acquisition comps is true?

• A. They are always the best indicator of value
• B. They are greatly affected by their timing and market trends, current multiples
• C. They ignore market multiples
• D. They are unaffected by deal timing

Answer: (B)

Acquisition comps reflect what buyers actually paid for similar companies, so they inherently carry the market conditions at the time of each deal. Multiples like EV/EBITDA move with market sentiment, financing conditions, competition for deals, and overall risk appetite. Because of that, the numbers you pull from recent acquisitions can swing a lot depending on when the deals happened and the prevailing market trends. In other words, valuation multiples used in comps are time- and market-sensitive, which is why this statement is true.

Notes on the other ideas: acquisition comps aren’t always the best or sole indicator of value, since they can be skewed by deal-specific terms, synergies, or unique company traits. They also don’t ignore market multiples; rather, they rely on them. And they’re not immune to the timing of a deal—timing does matter for the comps you observe.