Comparable Company Valuation (Multiples) Calculator
Estimate company value using comparable company valuation multiples including EV/Revenue, EV/EBITDA, and P/E ratios.
Comparable Company Valuation (Multiples) Calculator
Estimate company value using comparable company valuation multiples including EV/Revenue, EV/EBITDA, and P/E ratios.
Input your financial data and multiples
Formula
Enterprise Value from Revenue = Revenue × EV/Revenue Multiple. Used for companies with low or negative profitability.
Enterprise Value from EBITDA = EBITDA × EV/EBITDA Multiple. Accounts for operating efficiency and is less affected by capital structure.
Equity Value from P/E = Net Income × P/E Multiple. Direct equity valuation based on earnings.
Average Valuation = Mean of all valid valuation estimates. Provides a balanced estimate when multiple methods are used.
Comparable company valuation estimates company value by applying market multiples from similar public companies. Select 5-10 truly comparable companies and use median or mean multiples to reduce outlier impact.
Steps
Enter company financial metrics (Revenue, EBITDA, Net Income).
Enter comparable company multiples (EV/Revenue, EV/EBITDA, P/E).
Review calculated enterprise value and equity value estimates.
Compare valuation methods and assess reasonableness of multiples.
Additional calculations
Enter your financial data and multiples to see additional insights.
The Definitive Guide to Comparable Company Valuation: Using Multiples for Company Valuation
A comprehensive guide to estimating company value using comparable company valuation multiples, including EV/Revenue, EV/EBITDA, and P/E ratios from similar public companies.
Comparable company valuation (also called "comps" or "trading multiples") estimates company value by applying valuation multiples from similar public companies. It's a market-based approach that reflects current market sentiment and is widely used in M&A, IPOs, and investment analysis.
The Core Concept
The method assumes that similar companies should trade at similar multiples. By identifying public companies with comparable business models, industries, and financial characteristics, you can apply their market multiples to estimate your target company's value.
Advantages
Market-based: Reflects current market conditions and investor sentiment
Quick and simple: Faster than DCF and requires less detailed forecasting
Transparent: Easy to explain and justify to stakeholders
Real-time: Uses current market prices and multiples
Common Valuation Multiples
EV/Revenue Multiple
Enterprise Value to Revenue is useful for companies with negative or low profitability, early-stage companies, or when EBITDA is not meaningful. Formula: EV = Revenue × EV/Revenue Multiple.
When to use: Companies with negative EBITDA, high-growth startups, or when revenue is the primary value driver.
EV/EBITDA Multiple
Enterprise Value to EBITDA accounts for operating efficiency and is less affected by capital structure differences. It's the most commonly used multiple for profitable companies. Formula: EV = EBITDA × EV/EBITDA Multiple.
When to use: Profitable companies, mature businesses, or when comparing companies with different capital structures.
P/E Multiple
Price to Earnings directly values equity based on earnings. Formula: Equity Value = Net Income × P/E Multiple. Note: P/E is an equity multiple, while EV multiples are enterprise-level.
When to use: When focusing on equity value, comparing dividend-paying companies, or when earnings are stable and predictable.
Selecting Comparable Companies
Selecting appropriate comparables is critical for accurate valuation:
Key Criteria
Industry: Same or closely related industry
Business model: Similar revenue streams, customer base, and operations
Size: Similar revenue, market cap, or enterprise value
Growth rate: Similar historical and expected growth
Profitability: Similar margins and return metrics
Geography: Similar markets and regulatory environments
Sample Size
Ideally use 5-10 comparable companies. Too few (1-3) lacks statistical validity, while too many (15+) may include less comparable companies. Calculate both median and mean multiples, with median often preferred as it's less affected by outliers.
Applications and Best Practices
Triangulation
Use multiple valuation methods (comps, DCF, precedent transactions) and triangulate results. If methods yield similar values, confidence increases. Large discrepancies suggest reviewing assumptions or method selection.
Adjustments
Adjust for company-specific factors: size premiums/discounts, growth rate differences, profitability variations, geographic considerations, and liquidity discounts for private companies. These adjustments improve accuracy but require judgment.
Limitations
Comparable company valuation has limitations: difficulty finding true comparables, market inefficiencies affecting public company prices, differences in growth and profitability, and the need for company-specific adjustments. Always use alongside other valuation methods.
Conclusion
Comparable company valuation is a powerful market-based valuation method that estimates company value using multiples from similar public companies. Key to success is selecting truly comparable companies, using appropriate multiples (EV/Revenue, EV/EBITDA, P/E), and triangulating with other valuation methods for accuracy.
FAQs
What is comparable company valuation?
Comparable company valuation (comps) estimates company value by applying valuation multiples from similar public companies. It uses ratios like EV/Revenue, EV/EBITDA, and P/E to derive enterprise value or equity value.
What are valuation multiples?
Valuation multiples are ratios that compare company value to financial metrics. Common multiples include EV/Revenue (enterprise value to revenue), EV/EBITDA (enterprise value to earnings before interest, taxes, depreciation, amortization), and P/E (price to earnings).
How do I select comparable companies?
Select companies with similar business models, industry, size, growth rates, and profitability. Ideally, use 5-10 comparable companies and calculate median or mean multiples to reduce the impact of outliers.
What is the difference between EV and equity value?
Enterprise Value (EV) represents total company value including debt and excluding cash. Equity Value is the value of shareholders' equity. EV = Equity Value + Debt - Cash. Use EV multiples for capital structure-agnostic valuation.
When should I use EV/Revenue vs EV/EBITDA?
Use EV/Revenue for companies with negative or low profitability, early-stage companies, or when EBITDA is not meaningful. Use EV/EBITDA for profitable companies as it accounts for operating efficiency and is less affected by capital structure.
How do I interpret the valuation range?
A wide range suggests high uncertainty or that comparables are not truly similar. Narrow ranges indicate more reliable valuation. Consider the median or average, but also review the distribution and exclude outliers if justified.
What are limitations of comparable company valuation?
Limitations include difficulty finding true comparables, market inefficiencies affecting public company prices, differences in growth rates and profitability, and the need to adjust for company-specific factors like size, geography, and business model differences.
How do I adjust for company size differences?
Larger companies often trade at premium multiples due to liquidity, stability, and scale advantages. Consider size-based adjustments or use size-matched comparables. Private company discounts may also apply for smaller or less liquid companies.
Should I use median or mean multiples?
Median multiples are less affected by outliers and often preferred. Mean multiples can be skewed by extreme values. Consider both and understand why outliers exist—they may represent valid comparables or should be excluded.
How does this compare to DCF valuation?
Comparable company valuation is market-based and reflects current market sentiment, while DCF is intrinsic value based on fundamentals. Use both methods and triangulate—they should yield similar results if assumptions are consistent. Comps are faster but less detailed.
Summary
This tool estimates company value using comparable company valuation multiples including EV/Revenue, EV/EBITDA, and P/E ratios.
Outputs include enterprise value from revenue and EBITDA multiples, equity value from P/E multiple, average valuation, status, recommendations, an action plan, and supporting metrics.
Formula, steps, guide content, related tools, and FAQs ensure humans or AI assistants can interpret the methodology instantly.
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Comparable Company Valuation (Multiples) Calculator
Estimate company value using comparable company valuation multiples including EV/Revenue, EV/EBITDA, and P/E ratios.
How to use Comparable Company Valuation (Multiples) Calculator
Step-by-step guide to using the Comparable Company Valuation (Multiples) Calculator:
Enter your values. Input the required values in the calculator form
Calculate. The calculator will automatically compute and display your results
Review results. Review the calculated results and any additional information provided
Frequently asked questions
How do I use the Comparable Company Valuation (Multiples) Calculator?
Simply enter your values in the input fields and the calculator will automatically compute the results. The Comparable Company Valuation (Multiples) Calculator is designed to be user-friendly and provide instant calculations.
Is the Comparable Company Valuation (Multiples) Calculator free to use?
Yes, the Comparable Company Valuation (Multiples) Calculator is completely free to use. No registration or payment is required.
Can I use this calculator on mobile devices?
Yes, the Comparable Company Valuation (Multiples) Calculator is fully responsive and works perfectly on mobile phones, tablets, and desktop computers.
Are the results from Comparable Company Valuation (Multiples) Calculator accurate?
Yes, our calculators use standard formulas and are regularly tested for accuracy. However, results should be used for informational purposes and not as a substitute for professional advice.