Module II· Trading ComparablesBasic
Question
What criteria do you use to select trading comps?
Answer
Main criteria
- Business model: same industry, products, customers
- Geography: match the target's region (e.g. European targets with European comps)
- Size: market cap 0.5x−2x of the target
- Margins: similar EBITDA margin
- Growth: comparable top-line growth
- Capital structure: similar D/E range
In practice
industry-code screen (GICS, NACE) − qualitative filtering − 6−12 final comps. In the pitch: Tier 1 (closest) + Tier 2 (more peripheral).
Pitch tip
Senior MDs look closely at the universe logic — comp-set selection often gets 'gamed'.