valuation

How Comparable Company Analysis (CCA) Is Built

Comparable company analysis (CCA, or trading comps) is the workflow that screens peers, computes consistent trading multiples, and applies those multiples to the target. It is the market approach executed on listed evidence.

A repeatable workstream, not a printout of Bloomberg

Comparable company analysis is the method: a documented sequence that turns comparable companies into a value range. AICPA's guideline public company method and CFA trading-comps practice share the same skeleton even when the software differs.

Standard steps

1. Define the target's economics and the interest being valued (control vs minority).
2. Screen a long list (industry, size, geography, listing).
3. Reject false peers with written reasons.
4. Collect prices and last filings; compute diluted shares, net debt, NCI, leases.
5. Build trading multiples on LTM and NTM, with one accounting policy.
6. Present median / IQR; optionally regress multiples on growth or margin.
7. Apply the chosen statistic to the target's matching driver; bridge EV to equity.

Skipping steps 3 and 4 is how CCA becomes a decoration.

Statistics that survive a challenge

Means are fragile. Medians and interquartile ranges are the default. A regression of EV/EBITDA on expected growth can justify placing the target above or below the median if the R² is not a fantasy on five points. Footnote FX dates, fully diluted share counts, and whether EBITDA is broker consensus or company-defined.

Worked illustration (invented CCA output)

Target: invented Solstice Safety Co., adjusted LTM EBITDA €4.90m. Illustration only.

Statistic (primary set n=6)	EV/EBITDA LTM	Implied EV
25th percentile	7.1x	€34.8m
Median	8.0x	€39.2m
75th percentile	9.0x	€44.1m
Selected (slight premium for margin vs median)	8.3x	€40.7m

A parallel precedent transactions column might sit 0.8–1.5x higher. CCA is the minority/liquid reference; it is not automatically the bid.

Investor and M&A relevance

CCA is the language of screening memos, fairness presentations, and first-round bids. It is fast, auditable, and hostile to unique stories—which is a feature. When the target truly has no peers, good CCA says so and hands the argument to DCF and deals, instead of inventing a set.

Common mistakes

• Using enterprise value based on basic shares.
• Mixing calendar and fiscal years in NTM.
• Applying a minority CCA median to 100% control without discussion.
• Cleaning "one-offs" on the target but not on the peers.
• Letting one mega-cap dominate a weighted average.

Limitations

CCA embeds today's market mood and the peers' own mispricing. Thin sets are noisy. Cross-border CCA needs tax, lease, and listing-liquidity humility. It will not price synergies; those belong in a separate DCF on the buyer's model.

Dazur Perspective

Dazur runs CCA as a dated file: sources, share counts, and exclusion notes included. Owners see where they sit in the IQR, not a single banker "we think 10x". That artefact travels into the data room and still makes sense when a new buyer joins in week six.

Related terms

• Comparable Companies
• Trading Multiples
• Valuation Multiples
• EV/EBITDA
• Enterprise Value
• Precedent Transactions

Sources

• CFA Institute (https://www.cfainstitute.org/)
• Damodaran Online (https://pages.stern.nyu.edu/~adamodar/)
• International Valuation Standards (IVS) (https://www.ivsc.org/standards/)
• AICPA VS Section 100 (https://www.aicpa.org/resources/download/statement-on-standards-for-valuation-services)