What to see in the other companies when performing COMPARABLE COMPANY ANALYSIS:
comparable company analysis is useful to derive the value of a business by selecting a group of appropriate ’’peers’’ based on some characteristics like:
1. Industry: this is the first aspect to consider since it comprises companies with the same primary business activities, operations and sectors
2. Size, in terms of revenues, cash flows, assets or other economic and financial measure
3. Geography: companies of the same territories are similar in terms of rules and regulations, consumption, supply and demand trends
4. Profitability: if it’s positive, constant and not so volatile, the higher the valuation will be - so the comparison should take into account the steadiness of economic performances
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