Glossary
Deal economics
What is trading comparables?
What similar listed companies trade at, as multiples of earnings.
The quickest read of value, and the easiest to bend: pick faster-growing peers and the multiple rises without any buyer agreeing to pay it.
A worked example
Five listed peers trade between 9x and 12x EBITDA, with a median of 10.5x. Applied to a target with $80m of EBITDA, that points to an enterprise value of about $840m, before any premium for control.
Where it catches you in the game
- Mandate cards show comps next to precedents and the DCF; your pitch is quoted as a premium to comps.
It comes up most on the buy-side analyst desk and the investment banking desk.
Related terms
Learn it by using it
Definitions stick once they've cost you money. Take a seat, make three calls a year and watch what trading comparables does to your returns.