Definition
Comparable analysis values a company by applying valuation multiples from similar public companies. Analysts select peers based on industry, size, growth, and profitability, then apply median or average multiples to the target company's financials.
Formula
Example
If peer software companies trade at 15x EV/EBITDA and your target has $100M EBITDA, implied EV is $1.5 billion. Adjust for growth or margin differences.
FAQ
What is Comparable Company Analysis (Comps)?
Valuation method comparing a company to similar publicly traded peers.
How do you calculate Comparable Company Analysis (Comps)?
A common formula for Comparable Company Analysis (Comps) is: Target Value = Target Metric × Peer Multiple (e.g., EBITDA × EV/EBITDA multiple)
Why is Comparable Company Analysis (Comps) important?
Comparable Company Analysis (Comps) helps investors evaluate valuation and make more informed decisions.
Related Terms
EV/EBITDA
A valuation multiple comparing enterprise value to earnings before interest, taxes, depreciation, and amortization.
Precedent Transactions Analysis
Valuation method using multiples from past M&A deals in the same industry.
Relative Valuation
Valuing a company by comparing its multiples to peers or historical averages.