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TVS 014 – Comparable Companies Analysis

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TVS 014 – Comparable Companies Analysis

Today's episode will cover another one of the most common valuation techniques, Comparable Companies Analysis, which is an extrinsic form of valuation that people use for companies ...

Today’s episode will cover another one of the most common valuation techniques, Comparable Companies Analysis, which is an extrinsic form of valuation that people use for companies. Hope that you enjoy the episode and takeaway understanding how this method is used!

  • Extrinsic Valuation
    • Ratios
  • Common Comps Multiples
    • EV / Revenue
    • EV / EBITDA
    • Price / Earnings
  • Drivers and lever that go into Comps
  • If two companies are identical in terms of size, industry, technology, etc. but one grows quicker than the other, which company would you be more willing to pay for?
  • Why are comparable companies analysis useful?
    • Valuing private companies – Snapchat
    • Determining valuation in an M&A situation
  • Things to be careful about when performing this analysis
    • Picking the right set of comparable companies
    • Using the right multiples i.e. EV / Rev vs. Price / Earnings
  • Pros and Cons of this type of analysis
  • How can this be applied to everyday life?

As always, please let me know if you have any questions, comments, or suggestions. Email me directly at alan@thevampiresquid.com or on the contact form. Also, please subscribe to my facebook page for live updates facebook.com/thevampiresquid. Also follow me on Quora at https://www.quora.com/profile/Alan-Li-1

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