Introduction to Comparable Company Analysis

This article explains Comparable Company Analysis (Comps), a widely used valuation method that determines a company's worth by comparing it to similar businesses using financial multiples like EV/EBITDA and P/E. It outlines the step-by-step process—from selecting peer companies and gathering data to calculating and applying multiples—while highlighting its advantages (speed, market-based) and limitations (dependency on quality comparables, market volatility). The guide also distinguishes between enterprise and equity value multiples, making it a practical resource for financial analysis and investment decision-making.