Module II· Trading ComparablesIntermediate

Question

Which qualitative filters do you apply after the initial screen?

Answer

Exclusions:

Holding structures with a mixed portfolio (e.g. Berkshire-style).
Distressed names (CDS spreads >300bps, B-rating or worse).
Recent IPOs (<2 years of trading history).
Heavily distorted medium-term figures (a large acquisition or divestiture in the last 2 years).
Government-controlled (free float <30%).
Pre-profitability (negative EBITDA — exclude for EV/EBITDA, keep for EV/Sales).
Valuation outliers (>3 standard deviations from the median). The final set should have 6−10 robust comparables.

Deep diveShow more details

Pitch tip

Document the qualitative exclusions in a slide footnote — 'X excluded due to recent transformative M&A; Y excluded due to financial distress'.

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