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Comparable Company Analysis
A valuation method that determines company value by comparing financial multiples to similar public or private companies.
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
Definition
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.
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 Terms
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