What are 'broken comps', and how do you get around the problem?

Broken comps are comps that no longer trade or show unrepresentative multiples. Four typical triggers:

• Buyout / takeover in the comp set — the stock no longer trades actively.
• Major restructuring underway — a spin-off assumption, no 'going concern'.
• Accounting scandal — a fraud blowup.
• Distress — a price collapse from a rating downgrade.

exclude broken comps from the universe and document them in the pitch footnote.

if 3 of 8 comps are 'broken', the remaining set is too small — then widen the universe to adjacent sectors or move the reference date back.