Module VI· Trading Comps Model BuildAdvanced
Question
How do you adjust comps for different business models: pure-play versus conglomerate?
Answer
Pure-play comps are more directly comparable. Conglomerates require segment analysis, SOTP, or may be excluded if the target segment is not material. Adjust for margin, growth, geography, cyclicality, capital intensity, and revenue model. Do not blindly apply a conglomerate multiple to a pure-play target without a relevance explanation.