---
title: "Comparable Company Analysis"
url: "https://mahouse.world/glossary/comparable-company-analysis"
type: "glossary term"
topic: "Valuation"
author: "Ihor Vlasov"
reviewed: "2026-09-20"
published: "2026-08-10"
---

# Comparable Company Analysis

Comparable company analysis values a business by the multiples at which similar listed companies trade — enterprise value to revenue, to EBITDA, or price to earnings or to book — applied to the target's own figures. It answers "what would the market pay for this today", is the first page of every valuation, and for a fintech it depends on the honest choice of which listed companies are actually comparable.

**Also known as:** Comps, Trading comparables, Trading multiples

## Key facts

- **Used at:** every valuation — fairness opinions, pitch books, fundraising decks, the sanity check on a discounted cash flow
- **Binding:** no — an analysis; its output is a range, not a price
- **Typical multiples:** EV/EBITDA and EV/revenue for payments and software; price/earnings and price/tangible book for banks and lenders; EV/ARR for subscription businesses; often forward (next twelve months) rather than trailing
- **Typical adjustment:** a discount of 20–30% from listed multiples for a private company's illiquidity and size; a further discount or premium for growth and margin relative to the set
- **Parties:** the adviser or analyst who selects the set, and the two sides of a negotiation, each with its own set

## How comparable company analysis works in practice

The analyst selects a set of listed companies that share the target's business model, sector, size and growth — for a merchant acquirer, the listed acquirers; for a neobank, the listed digital banks; for a lending platform, the listed lenders, not the software companies its founders prefer. For each, enterprise value is computed from market capitalisation plus net debt, and divided by the relevant metric — usually the consensus forecast for the next twelve months — to give a multiple. The set's median and range are then applied to the target's forecast metric, with adjustments: down for being private and smaller, up or down for growth and margin against the set.

The choice of set is the analysis. A payments company at 20% growth and 25% margins does not belong in a set of 5%-growth incumbents or of 60%-growth software; the honest set is the four or five companies a buyer would actually compare it with, and the honest multiple is where the target sits within that set on the metrics that drive valuation. Fintech makes this harder than most sectors, because "fintech" spans lenders valued on book, processors valued on EBITDA and software valued on revenue, and a target is often a mix.

The output is a range and a chart, which is why comps sit alongside precedent transactions and a discounted cash flow: each method has a bias, and the valuation lives where they overlap.

## Example

An analyst values a private payments company with €40m of forecast revenue, €8m of forecast EBITDA and 22% growth. Listed comparables — five European and US payment processors — trade at 9–14× forward EBITDA, median 11.5×, with growth of 8–15%. The target grows faster but is private and a tenth the size; the analyst applies a 25% liquidity and size discount and a 10% growth premium: 11.5 × 0.75 × 1.10 ≈ 9.5×, giving €76m of enterprise value, with a range of €68–84m from the set's spread. The seller's adviser presents a set of three high-growth payment software companies at 18× and asks for €140m; the buyer's adviser asks why none of them processes a transaction.

## Common mistakes

- Choosing the comparable set to produce the answer, and losing credibility for the whole valuation.
- Trailing multiples for a fast-growing target, or forward multiples on a forecast nobody tested.
- Forgetting the private-company discount, or applying it to a target that is about to list.
- Mixing multiples on different bases — one company's EV/EBITDA against another's price/earnings.
- Treating the median as the answer rather than asking where in the range the target belongs and why.

## Related terms

- [Precedent Transaction Analysis](https://mahouse.world/glossary/precedent-transaction-analysis.md)
- [EV/EBITDA Multiple](https://mahouse.world/glossary/ev-ebitda-multiple.md)
- [Discounted Cash Flow](https://mahouse.world/glossary/discounted-cash-flow.md)
- [Enterprise Value](https://mahouse.world/glossary/enterprise-value.md)
- [Liquidity Discount](https://mahouse.world/glossary/liquidity-discount.md)
- [Annual Recurring Revenue](https://mahouse.world/glossary/annual-recurring-revenue.md)

— Ihor Vlasov, M&A FinTech Expert. Last reviewed 2026-09-20. https://mahouse.world/authors/ihor-vlasov