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How do you select relevant comparable companies or precedent transactions?

Let me break it down simply:

Think of it like dating apps. Just because two people are the same age doesn't mean they're a good match. Same with companies - you need multiple points of similarity for a meaningful comparison.

Business model comes first. A subscription software company isn't comparable to a one-time license software company, even though both are "tech." Like comparing Netflix to movie theaters - totally different economics.

Size matters, but isn't everything. Generally, stay within a reasonable revenue range (say, 0.5-2x), but don't be rigid. A smaller pure-play competitor might be more relevant than a bigger diversified one.

Geographic focus is crucial. Companies face different growth rates, risks, and regulations across markets. A European telecom faces different dynamics than a Latin American one.

End markets drive performance. Two industrial companies might look similar, but if one serves aerospace and the other serves mining, they'll trade differently. Industry exposure matters.

Remember: Good comps analysis is more art than science. Don't just screen on industry codes and size. Think deeply about what drives value in your sector. The best comps share similar value drivers, not just similar business descriptions.

Talk soon,

Sam