Comparable Company Valuation Calculator (Market Peer Multiples Model)

Configuring target financial inputs

To run a comparable company analysis, start by entering the trailing twelve months (LTM) financial metrics of the target company you want to value:

• LTM Revenue: Enter the total sales generated by the target over the last twelve months. This is the primary driver for high-growth or pre-profit businesses.
• LTM EBITDA: Input the earnings before interest, taxes, depreciation, and amortization. This represents the core operating profitability of the target.
• Target Net Debt: Input total interest-bearing debt minus cash and cash equivalents. If the target has more cash than debt, enter a negative number (Net Cash).

Choosing representative peer multiples

The accuracy of your valuation depends on selecting appropriate multiples from comparable industry peers:

Identify similar companies in terms of industry, size, growth rates, and margins. Find their Enterprise Value (EV) and calculate their multiples:

• Peer EV/Revenue Multiple: Calculated as peer Enterprise Value divided by peer revenue. Enter the average multiple of the peer group.
• Peer EV/EBITDA Multiple: Calculated as peer Enterprise Value divided by peer EBITDA. Typically ranges between 8x and 25x depending on growth.

Target financials and peer multiples

Let's walk through an illustrative valuation scenario for an enterprise SaaS provider preparing for a Series B exit. The M&A team gathers the following parameters:

• Target LTM Revenue = $10,000,000
• Target LTM EBITDA = $2,500,000
• Target Net Debt = $2,000,000 (comprising $3M bank debt minus $1M cash)
• Average Peer EV/Revenue Multiple = 6.0x
• Average Peer EV/EBITDA Multiple = 20.0x

Step-by-step mathematical walkthrough

First, calculate the implied Enterprise Value using the Revenue Multiple:

Implied EV (Revenue) = $10,000,000 * 6.0 = $60,000,000

Next, calculate the implied Enterprise Value using the EBITDA Multiple:

Implied EV (EBITDA) = $2,500,000 * 20.0 = $50,000,000

Average the two implied Enterprise Values to determine the blended EV:

Blended Enterprise Value = ($60,000,000 + $50,000,000) / 2 = $55,000,000

Finally, subtract Net Debt to calculate the implied Equity Value available to shareholders:

Implied Equity Value = $55,000,000 - $2,000,000 = $53,000,000

This illustrative calculation shows how blending multiple methods helps smooth out outlier results (such as high revenue multiples that ignore profitability) to produce a defensible valuation range.

Analyzing business models and revenue quality

Ensure your peer group shares a similar business model. For instance, comparing a software-as-a-service (SaaS) provider with high recurring revenue to a consulting agency with transactional billing will produce skewed multiples, as recurring revenue models command a significant premium in the market.

Aligning growth profiles and profit margins

Comparable peers should have similar growth rates and margins. A high-growth target expanding at 50% annually should not be valued using multiples from a mature peer growing at 5%. Look for peers with comparable growth profiles to ensure a realistic valuation range.

Adjusting for size and liquidity discounts

Public companies typically trade at a premium due to liquidity and regulatory standards. When valuing a smaller, private business, analysts often apply a size or marketability discount of 20% to 30% to public peer multiples to reflect transaction risks.