Comparable Company Analysis (Comps)

Definition

The "comps" method starts from the market: what multiple did buyers recently pay for businesses comparable in sector, size, growth and geography? You apply that median multiple to the target's normalised EBITDA (or revenue) to arrive at an enterprise value.

Its strength is defensibility: a multiple from real transactions is harder to dispute than a DCF full of assumptions. The pitfall is comparability — a listed peer or a PE platform deal is rarely a fair mirror for a Belgian SME. That is why you adjust for size, liquidity and owner-dependence.

When it matters

Comps are the standard anchor method for SME transactions and the basis of the Upswitch Multiples Index. Combine them with DCF and NAV: one method is an opinion, three converging methods are a defensible valuation.

Frequently asked

Where do I get comparable multiples for an SME?

From private-market transaction data such as the Upswitch Multiples Index, with per-sector and per-country filters. Listed-company data often overstates: public companies are larger, more liquid and less owner-dependent than a typical SME.

Which multiple is most used?

EV/EBITDA for cash-flow-positive SMEs; EV/revenue for growth or loss-making businesses; ARR multiples for SaaS. The choice depends on sector and profitability.

Should I adjust for the size of my business?

Yes. Smaller businesses typically trade at lower multiples (the "size discount") due to higher risk and lower liquidity. Adjust the peer multiple down if your business is smaller than the comparison group.