Comparable Company Analysis (Comps)
Comparable Company Analysis (Comps) is a relative valuation method that estimates a company’s value by comparing it with similar publicly traded firms using market-based multiples such as enterprise value to EBITDA (EV/EBITDA) and price-to-earnings (P/E). Analysts use the multiples to derive an implied value range and to benchmark performance against peers.
Example: In a typical scenario, a banker identifies a peer group of publicly traded companies and applies the peers’ EV/EBITDA multiples to the target’s EBITDA to estimate an implied enterprise value range, then adjusts for cash and debt to derive an implied equity value.
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