Pattern: Precedent transaction

What it is

You cite a comparable historical transformation — a peer that did exactly what you're proposing, with documented outcome. The implicit argument: "this isn't a hypothesis, it's a replication".

It is the empirical anchor that makes every other pattern credible. A peer-gap chart shows the gap; a sum-of-parts shows the math; a precedent transaction shows the path actually works.

Why it works

It converts speculation into pattern-matching. "If you do X, Y will happen" becomes "When [comparable] did X, Y happened, and Y was worth [$Z]."
It pre-empts execution risk. The most common rebuttal — "this could destroy value if done wrong" — is neutralised when 3–5 prior cases all worked.
It satisfies sceptical institutional investors. PMs at large index funds need to defend their vote internally; precedents are defensible inputs to that conversation.
It builds the activist's reputation. Citing the right precedents signals you've done the work.

When to use it

✅ Always. Almost every adversarial deck benefits from a precedent section. The only question is which transaction, not whether to use one.
✅ Especially valuable when proposing structural change (spin, REIT conversion, sale, refranchising) that's been done in-sector
✅ Critical for management-change theses ("Hunter Harrison did this at CN")
❌ Don't manufacture a precedent. If no comparable exists, your thesis is more speculative — acknowledge it rather than reaching
❌ Avoid weak precedents (different sector, very different scale, decades old) — they invite the "not comparable" rebuttal

The four kinds of precedent

1 · Operator precedent

A specific person who delivered the transformation you're proposing, applied to a similar asset.

Hunter Harrison at CN → CP (Pershing Square 2012)
Marathon's Mike Hennigan transformation → Phillips 66 (Elliott 2025)
Richard Dreiling at Dollar General → Dollar Tree (Mantle Ridge 2021)

This is the most powerful kind because it removes uncertainty about whether the change is executable.

2 · Structural precedent

A peer that executed the same structural move (REIT spin, dual-listing unification, breakup) with documented multiple expansion.

MGM Growth Properties REIT spin → MGM (2016) — anchor for Land & Buildings hotel-REIT theses
Hilton → Park Hotels (2017) — REIT conversion template
AT&T → WarnerMedia spin → Discovery (2022) — media conglomerate separation

3 · Activist-engagement precedent

A prior activist campaign at a comparable target where the engagement itself drove the value capture.

Trian / DuPont (2015) → outcome (Dow-DuPont merger + 3-way spin by 2019)
Elliott / BHP Billiton (2017) → unification 2022
Starboard / Darden (2014) → full board change → 6-year TSR outperformance

4 · Industry-cycle precedent

A historical regime shift in the sector (deregulation, technology disruption, capital-allocation change) that affected comparable companies similarly.

PSR (Precision Scheduled Railroading) adoption across Class I railroads (2003–2018)
Industrial conglomerate dismantling (2014–2020) — DuPont, GE, Honeywell precedents for any conglomerate breakup

Anatomy of the precedent slide

PRECEDENT TRANSACTIONS

Target          Action            Year   Multiple before  After   1y TSR  3y TSR
──────────────────────────────────────────────────────────────────────────────
McDonald's      Sale of McOpCo    2006   ~14x EBITDA      ~17x    +18%    +52%
Yum! / Yum China  Spin            2016   ~16x             ~22x    +24%    +48%
Hilton / Park   REIT spin         2017   ~12x             ~15x    +12%    +21%
Marriott / MVCI  Spin             2011   ~11x             ~14x    +9%     +33%
Median                                   ~13x             ~17x    +14%    +38%

Implication for [target]: applying the median uplift implies $X per share.

Critical features:

5 columns minimum: target, action, year, multiple before/after, TSR
Median row at the bottom — sceptical readers anchor here
Implied translation to your target as a final line — quantifies the read-across

Language that works

"Every comparable [structural move] in [sector] since [year] has generated [median TSR]."
"[Operator] did exactly this at [precedent target] — [specific outcome]."
"This is not a novel proposal; the median sector spin in the last decade returned [X]% in 24 months."
"Management cannot argue execution risk when [N] peers have already executed."

Common mistakes

Single-precedent reliance. One case is anecdote; 3–5 cases is pattern. Always assemble multiple.
Cherry-picked cases. If you only show winners, the rebuttal ("survivorship bias") is fatal. Show median outcomes including underperformers.
Stale precedents. A 1995 transaction in a different regulatory regime won't carry weight. Prefer last-decade precedents.
Wrong scale. A $500M-cap precedent doesn't justify a $50bn-cap thesis. Match by market cap and revenue.
Conflating outcomes. The transaction outcome ("Hilton spun the REIT") is different from the activist outcome ("the activist captured X% of the upside"). Distinguish.

Exemplars (precedent-rich decks)

Pershing Square · McDonald's (Nov 2005) — 12 precedent REIT separations cited with multiples and outcomes
Pershing Square · Canadian Pacific (Feb 2012) — Hunter Harrison at CN as the unifying precedent across the entire deck
Trian · DuPont (Feb 2015) — 9 industrial-conglomerate breakups cited as the empirical anchor
Elliott · BHP Billiton (Apr 2017) — Rio Tinto and other DLC unifications as precedent
Ancora · Norfolk Southern (Apr 2024) — every other Class I PSR transformation cited as precedent
Greenlight · Peloton (Oct 2024) — subscription-business precedents (Spotify, Netflix transitions) used as the bull case empirical anchor
Elliott · Phillips 66 (2025) — Marathon Petroleum (Elliott's prior 2019 engagement) cited extensively as precedent

Full list: appears in many by_thesis.json and by_pattern.json exemplars — precedent transactions are ubiquitous in adversarial decks.

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