Comparable Companies vs. Precedent Transactions

Comparable companies analysis and precedent transactions analysis are both relative valuation methods, but they answer different questions. To use them well, you need to understand their inputs, implied valuation ranges, and typical relationship, especially in valuation work and investment banking interviews.

Author: Michael Harris Updated 5 min read

What comparable companies analysis measures

Comparable companies analysis, often called trading comps, values a company based on the market valuations of similar publicly traded businesses. Bankers select peers using factors such as industry, business model, customers, size, growth, margins, and geography.

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