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Comparable Company Analysis

Quick Definition

A valuation method that determines company value by comparing financial multiples to similar public or private companies.

What is Comparable Company Analysis?

Comps valuation determines what a company is worth by examining what similar companies trade for. If comparable SaaS companies trade at 10x revenue, your company might be valued similarly.

Finding Good Comps

Look for companies with similar: industry/sector, business model, growth rate, profitability profile, and stage. The closer the match, the more relevant the comparison.

Common Multiples

Revenue multiples (EV/Revenue) for growth companies. EBITDA multiples (EV/EBITDA) for mature businesses. P/E ratios for profitable companies. ARR multiples specific to SaaS.

Formula

Valuation = Your Metric x Comparable Multiple

Example multiples:

  • EV/Revenue: 5-15x for SaaS
  • EV/EBITDA: 8-15x typical
  • EV/ARR: 5-20x depending on growth
Example

SaaS company seeking valuation:

  • Your ARR: $3,000,000
  • Your Growth: 80% YoY

Comparable companies at similar growth trade at 12x ARR.

Implied Valuation = $3M x 12 = $36M

Apply a private company discount of 20-30% if you're not public.

Related

Related Terms

Most Favored Nation (MFN)

A provision guaranteeing an investor will receive terms at least as favorable as any subsequent investor receives.

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Qualified Financing

The minimum raise amount that triggers automatic conversion of convertible notes or SAFEs.

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Maturity Date

The deadline by which a convertible note must be repaid or converted to equity.

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