This Comparable Company Analysis Template is a useful tool for investment banking professionals. Comparable company analysis (Comps) is a relative valuation method that looks at the valuation metrics of an industry peer group to determine the enterprise value of a company. Unlike discounted cash flow (DCF) analysis, which is an intrinsic valuation method, the calculation of EV is based on the assumption that the company being valued would achieve a similar valuation metric (e.g. EV/EBITDA, P/E, EV/Revenue) to its peers. To perform a Comps analysis, an analyst in investment banking, equity research, corporate development, or private equity would go through the following steps:
- Identify an appropriate industry peer group for comparison based on criteria such as geography, size, growth rate, and profit margins.
- Obtain financial information on the peer group companies from sources such as Bloomberg or Capital IQ.
- Create a comps table in Excel with information that should include company name, share price, market capitalization, net debt, enterprise value, revenue, EBITDA, EPS, etc.
- Calculate valuation multiples such as EV/Revenue, EV/EBITDA, P/E, P/B.
- Take the average or median of all comparable companies' multiples and use them as the valuing company's ratio, then multiply the multiples by the appropriate numbers to arrive at the enterprise value.