Module II· Trading ComparablesIntermediate
Question
What is calendarization, and when is it critical?
Answer
Calendarization
adjusting comps with different fiscal-year-ends onto a common calendar-year basis.
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Example
The target's FY = calendar year (Dec 31), Comp A has an FY ending June 30, Comp B ending March 31. A direct comparison of 'NTM EBITDA' would be distorted — NTM means something different for each comp. Method: a pro-rata mix of FY+1 and FY+2 based on how many months fall in the comparison window.
Example
A comp with an FY ending June 30, current date Sept 30 − 9 months of FY+1 (to June 30) + 3 months of FY+2 (to Sept 30) for CY-NTM. In practice: Bloomberg does this automatically ('CY1', 'CY2' fields). For middle-market pitches with pure-play comps (all Dec 31), it is rarely needed.