Relative Valuation Methods, Comparable & Transaction Multiples Valuation

Why similar companies trade alike · multiples and fundamentals · the consistency principle · pre- and post-financing metrics · enterprise-to-equity bridge

1. Why similar companies should be priced alike
2. A multiple is value divided by a metric: the drivers inside it
3. Example: two neighbouring supermarket chains, two different multiples
4. The consistency principle: matching the top and the bottom
5. Pre-financing and post-financing metrics: sorting the list
6. Example: spotting a mismatched multiple in a research note
7. Enterprise value and equity value: the two prices of a company
8. Building the bridge: debt, cash, leases, minorities and shares
9. Example: from a balance sheet to a price per share

EV/EBITDA, P/E and EV/Sales · trailing and next-twelve-month multiples · calendarizing · EV/EBIT, P/B and PEG · sector-specific multiples

1. What EV/EBITDA, P/E and EV/Sales each measure
2. Calculating the three multiples from reports and market data
3. When each multiple is useful and when it misleads
4. Trailing and next-twelve-month multiples: why the time frame matters
5. Calendarizing: putting different year-ends on one clock
6. Example: a March year-end and a December year-end side by side
7. EV/EBIT and P/B: when depreciation and book value matter
8. PEG and growth-adjusted measures
9. Choosing a multiple for capital-intensive, financial and growth firms

Peer screens · documenting inclusions and exclusions · non-recurring items · debt-like items · accounting differences · outliers and medians

1. What makes a company a true peer
2. Building a peer screen from an exchange list or data provider
3. Example: peers for a regional food retailer, with reasons written down
4. Why reported numbers are not comparable as they stand
5. Adjusting earnings, debt-like items and accounting differences
6. Example: cleaning one peer's results line by line
7. Outliers and small peer sets: why the average fails
8. Medians, quartiles and documented exclusions in a sheet
9. Example: a peer set with one extreme multiple

Market and filing data · dates and origins · linked inputs · check cells · refreshing a sheet · value ranges and summary charts

1. Where market and filing data come from and how far to trust it
2. Recording dates and origins, and refreshing without breaking links
3. Example: checking one peer's figures against its filing
4. The layout of a comps and precedent-transactions model
5. Linked inputs, source notes and check cells
6. Example: building a comps sheet from a blank file
7. From many multiples to one range: median, quartiles and spread
8. Sensitivity ranges and summary charts
9. Example: presenting a value range to a reader who will challenge it

Selecting past deals · deal multiples · control premium · synergies · cash versus stock · private-company discounts

1. What a past deal price shows that a share price does not
2. Selecting deals and calculating deal multiples
3. Example: separating the control premium from underlying value
4. Why deal multiples differ: synergies, payment and circumstances
5. Cash versus stock: reading the real price paid
6. Example: two similar deals, two different multiples
7. Why a private company is worth less than a listed twin
8. Applying size, illiquidity and marketability discounts
9. Example: valuing a family-owned company from listed peers

Growth, margin and leverage differences · ratio adjustments · simple regression · sector and size benchmarks · expectations inside a multiple

1. Why growth, margin and leverage make multiples differ
2. Ratio adjustments and simple regression in a spreadsheet
3. Testing whether the adjustment improved comparability
4. Why multiples differ across sectors and size buckets
5. Building a sector and size benchmark table
6. Example: a fast-growing online retailer and a cement maker
7. Reading the expectations inside a multiple
8. Reverse-engineering a multiple in a spreadsheet
9. Example: market sentiment against the company's own plan

Adjusted present value · tax shields · reconciling comps with DCF · weighting methods · the football field chart

1. Why separate operating value from financing effects
2. Building an APV model: unlevered value plus tax shields
3. Example: how value changes when a company changes its debt
4. Why relative value and DCF value disagree
5. Reconciling the two results in a bridge table
6. Example: deciding which result deserves more weight
7. How a football field chart works
8. Building the football field in a spreadsheet
9. Example: weighting the methods and writing the conclusion

Reading a real valuation case · common comps mistakes · correcting a flawed sheet · honest disclosure · early-stage companies

1. How to read a published valuation case
2. Tracing which peers, adjustments and multiples drove the answer
3. Case study: a listed company valued with comps and past deals
4. The common mistakes: periods, stale prices, mismatches, cherry-picking
5. A review checklist for any comps sheet
6. Exercise: correcting a flawed comps sheet
7. Honesty in valuation: what the reader must be told
8. Writing the disclosure: peer criteria, adjustments and limits
9. Example: the same value, presented honestly and presented poorly
10. Why early-stage companies break the usual comps method
11. Benchmarks and adjustments for early-stage companies
12. Example: comparing a young company with mature peers