Comparables Analysis

Comparables Analysis

1. Select comparables

   • In-depth study the targets
   • Business Profile
     • Sector
     • Products and Services
     • Customers and end market
     • Distribution Channels
     • Geography
   • Financial Profile

2. Locate financial information

   • SEC Filings
     • 10-K
       • Annual report
     • 10-Q
       • Quarterly report
     • 8-K
       • current report, report the occurrence of material corporate event/ triggering event
     • Proxy Statement
       • material sent to shareholder prior to shareholder meeting/ informing matters that will be discuss in the meeting.
   • Equity search
     • Research Report
       • Provide estimate of future performance and forward looking multiples. 
     • Consensus Research Estimate
   • Press Release and News

3. Spread key statistics, ratios, and trading multiples

   • Size
     • Equity value = fully diluted shares x price
       • How to calculate fully diluted shares
         • Treasury Stock Method assumptions
           • assumes that all tranches of in-the-money options and warrants are exercised at their weighted average strike price with the resulting option proceeds used to repurchase outstanding shares of stock at the company's current share price.
     • Key Financial Data
       • Sales
       • Gross Profit
       • EBITDA
       • EBIT
       • Net Income
   • Profitability
     • Gross Profit Margin = (sales - COGS)/ sales
     • EBITDA margin = (EBITDA/sales)
     • EBIT margin = (EBIT/sales)
     • Net Income margin
   • Growth Profile
   • Credit Profile
     • Credit Rating
     • LTM
     • Scrubbing/ sanitizing = adjust for non-recurring items
     • Adjust for recent events
   • Calculating multiple
     • Equity Value Multipples
     • Enterprise Value multiples

4. Benchmark the comparables

5. Determine the valuation