Public Comps: A Practical Guide to Private Company Valuation

Last Updated on July 31, 2025

You can have perfect models, clean financials, and still get the valuation wrong.

That’s the part no one tells you when you’re putting together your first public comps set. The formulas are easy enough, what’s hard is knowing which comparable companies to pick, how to normalize the data, and whether the valuation multiples you’re applying actually reflect the market value of your target.

And let’s be honest: if you’re here, you already know what public comps are supposed to do. You’re probably not looking for another glossary definition, you’re trying to figure out how to use them properly without wasting days wading through annual and quarterly reports or arguing over which peer companies are “close enough.”

This guide is for that. We’ll walk through the practical stuff: how to build a usable comps table, when to trust the numbers, and what to watch out for when applying comps to private company valuations. You’ll also see how some tools can streamline the process, not just for file sharing, but for maintaining the version control that real comp modeling actually requires.

Let’s get into it.

What Are Public Comps?

Public comps (short for public comparables) are a practical tool used in investment banking, M&A, and corporate finance to evaluate a company’s worth by comparing it to other publicly traded companies operating in the same industry or similar sectors.

In essence, this technique relies on something simple: if similar companies are valued a certain way on the market, then a fair estimate for your company should be in that same range. This method falls under comparable company analysis, one of the core valuation methods often used alongside discounted cash flow (DCF) and precedent transactions.

The reason public comps are so popular? They’re built on real-time market data. Instead of trying to predict a company’s future cash flows or using internal forecasts (which can be wrong), public comps anchor valuation in what the market is already willing to pay.

When are Public Comps Typically Used?

They’re useful in many scenarios, including:

• IPO pricing: Underwriters need to set a reasonable company valuation based on what other comparable public companies are worth.
• Private company valuations: Investors or buyers looking to acquire private companies can use public comps as a reference point, especially when financial information on the target is limited.
• Strategic M&A: Helps buyers decide how much to offer for a target company by evaluating valuation multiples of peer firms.
• Fundraising or VC due diligence: Even in private markets, venture firms will benchmark startup valuations using comparable companies that recently exited or went public.

One key benefit is its transparency. Since public companies publish annual and quarterly reports, investor presentations, and press releases, analysts can extract valuable financial metrics like EBITDA, gross profit, and market capitalization to plug into a public comps model.

That said, accuracy depends heavily on picking the right peers. If you’re comparing a fast-growing SaaS firm to a mature industrial company, your analysis will be skewed from the start.

Note: Public comps work best when there’s a solid pool of similar companies with publicly available financial data and consistent accounting standards.

In the world of M&A, valuation isn’t just about finding a number, it’s about painting a picture that investors, acquirers, and boards can trust. And that’s exactly where public comps shine: they create a valuation range based on actual market behavior, rather than theory or guesswork.

The Core Metrics Behind Public Comps

When conducting a comparable company analysis, numbers do the heavy lifting but not just any numbers. You need to choose the right valuation metrics to build a fair, grounded comparison. These metrics help normalize differences in company size, industry quirks, and capital structures, so you can arrive at a market value that actually reflects how publicly traded companies are priced.

Most analysts rely on a few core indicators. They’re not just popular, they’re practical.

Key Metrics Used in Public Comps:

• Enterprise Value / Revenue (EV/Revenue)
  A favorite in high-growth sectors like tech and SaaS. It compares a company’s enterprise value to its total revenue. Especially helpful when a firm isn’t profitable yet but has strong revenue growth.
• Enterprise Value / EBITDA (EV/EBITDA)
  A more complete picture than revenue multiples. Since EBITDA reflects earnings before interest, taxes, depreciation, and amortization, this ratio adjusts for differences in capital structure. It’s often used in private equity deals where operational efficiency is critical.
• Price-to-Earnings (P/E Ratio)
  Probably the most talked-about ratio in the public markets. It compares a company’s stock price to its earnings per share. However, it’s less useful for fast-growth firms or private companies where earnings fluctuate or aren’t disclosed.
• Equity Value vs. Enterprise Value
  Equity value reflects just the shareholders’ portion, while enterprise value gives the total cost to acquire the business, including bank debt, capital expenditures, and more. For public comps, EV is generally more reliable, since it removes distortions caused by different capital structures.
• Profit Margins and Net Income
  These offer a snapshot of company performance, especially when comparing similar companies in mature industries. High gross profit or net income can justify higher valuation multiples, even if cash flow is inconsistent.

Pro Tip: Always normalize for outliers and one-time items when comparing financials. A company might report stellar margins in Q4 due to cost cutting—but that doesn’t mean it’s sustainable.

These metrics don’t just help in valuing private companies, they also form the backbone of many financial modeling exercises used across investment banking, buy-side research, and even corporate development.

But remember, numbers without context can mislead. That’s why savvy analysts look beyond ratios and ask: What’s driving this growth rate? Are these earnings stable? Is the comp set too broad?

In short: pick your metrics like you’d pick teammates. You want reliability, transparency, and a track record that’s not too inflated.

How to Build a Public Comps Table (Step-by-Step)

If you’ve ever tried to value a company using comparable companies, you’ll know that the process isn’t just about plugging numbers into Excel. There’s a logic to it, a rhythm. Getting the comps right takes a mix of good judgment, data hygiene, and a bit of restraint (especially when you’re tempted to throw in that company you wish was a peer).

Here’s a simplified breakdown of how professionals go about it, especially in investment banking and private equity circles:

Step 1: Select the Right Peer Companies

This is the make-or-break moment. You need to choose publicly traded companies that operate in a similar space, with comparable revenue models, profit margins, and risk profiles. Avoid cherry-picking flashy outliers.

• Look at industry classification codes (NAICS/SIC)
• Match by company size, growth rate, and business model
• Exclude firms with abnormal one-off events (like mergers mid-year)

Step 2: Gather Financial Information

Once your peer group is set, gather historical financials, quarterly reports, and analyst estimates. Most of this is available through filings like 10-Ks, earnings transcripts, and platforms like Capital IQ or PublicComps.com.

• Focus on data like EBITDA, net income, cash flow, and market capitalization
• Adjust for different fiscal years or non-GAAP items
• Scrub for inconsistencies—don’t take reported numbers at face value

Step 3: Calculate Enterprise Value

To normalize across capital structures, you’ll need to calculate enterprise value for each peer. The basic formula:

EV = Market Cap + Total Debt – Cash & Cash Equivalents

This step is crucial for comparing valuation multiples across the board. EV lets you compare apples to apples, even if companies have different debt loads or cash positions.

Step 4: Compute the Valuation Multiples

This is where things come together. You divide EV by revenue, EBITDA, or other relevant financial metrics to get your valuation multiples. Don’t just average them—look for patterns, medians, and outliers.

• EV/Revenue
• EV/EBITDA
• Price/Earnings
• Revenue multiple (especially in tech/SaaS comps)

Make sure to note trends tied to company’s performance, seasonality, or market volatility.

Step 5: Apply to Target Company

Finally, use the multiples from your comps to estimate the company’s current market value. Multiply your target’s revenue or EBITDA by the selected range to arrive at an equity value or fair market value.

Example: If the peer group trades at 12x EV/EBITDA and your target has $15M in EBITDA, its implied enterprise value is $180M.

This entire process is repeatable, but it’s never plug and play. You’ll often revise comps as the company evolves, or when private markets start behaving differently from public markets.

Also, don’t overlook the admin side: saving different versions of your comps table, organizing deal files, or sharing securely with collaborators.

Common Mistakes to Avoid with Public Comps

Let’s be honest, comparable company analysis looks clean on a spreadsheet, but in practice, it’s messy. One wrong assumption and you could be off by millions in company valuation. While public comps are a staple in valuation methods, they’re only as reliable as the judgment behind them.

Here are some of the most common missteps analysts make when working with comparable companies, especially when valuing private companies:

• Choosing peers that aren’t really peers
  Just because two firms are in the same industry doesn’t mean they belong in the same comp set. If one’s in hypergrowth mode and the other’s barely breaking even, their valuation multiples will be worlds apart. Always ask: Would an investor see these as truly comparable public companies?
• Ignoring differences in capital structure
  Failing to adjust for bank debt, capital expenditures, or heavy cash positions will distort your enterprise value calculations. This is why we normalize to EV in the first place.
• Using stale or mismatched data
  Mixing data from different fiscal years or using outdated quarterly reports can throw your ratios off. Always align timeframes across all financial metrics, otherwise, your output will lack reliability.
• Relying on averages without context
  Sure, taking the mean EV/EBITDA sounds easy. But what if one company’s multiple is inflated due to a recent funding round or acquisition rumor? Outliers can wreck your model if you don’t apply judgment.
• Ignoring qualitative factors
  It’s tempting to only trust the numbers. But valuation metrics should reflect both quantitative and qualitative dimensions, think brand equity, leadership risk, or intangible assets that don’t appear in the reports.

Many analysts also forget that market data and investor sentiment can swing rapidly. What looks like a fair market value today might feel bloated tomorrow due to macro shocks or market volatility. That’s why it helps to revisit comps regularly and view them as part of a broader valuation toolkit, not a one-and-done fix.

Inaccurate comps don’t just lead to bad models, they can lead to bad decisions. Mispricing a deal, misguiding a client, or worse, missing a good opportunity because the numbers looked off on paper.

Additional Tools for Finding and Managing Public Comps

Finding good comparable companies isn’t always the hardest part, it’s organizing them, updating their financial data, and keeping track of shifting multiples over time. And if you’re handling private company valuations, the data isn’t always handed to you on a silver platter. That’s why a solid set of digital tools can be the difference between a sloppy model and an accurate valuation.

Below are some of the tools used across investment banking, private equity, and corp dev teams to handle the public comps process more efficiently:

1. PublicComps.com

Ideal for SaaS-focused analysts. This tool scrapes financial metrics, growth rates, and market data from verified sources and neatly packages it for fast use. It’s great for spotting trends in EV/Revenue or ebitda multiple benchmarks, especially if you’re pressed for time.

2. Capital IQ

A heavyweight in the field, CapIQ pulls from filings, earnings calls, and market feeds to give you deep control over valuation multiples, company performance history, and even present value estimates. The learning curve’s a bit steep, but once mastered, it’s invaluable especially when you’re juggling comps from several companies across regions or sectors.

3. Find-Comps.com

A lighter-weight alternative that focuses on fast peer identification. You plug in a ticker, and it suggests similar companies based on revenue size, company’s assets, and business model.

4. Multiples.vc

Useful for those looking into private companies and early-stage startup comps. It includes tools for benchmarking based on funding round, valuation bands, and fair market ranges powered by third-party data like Morningstar.

You don’t need a dozen platforms to run solid comparable company analysis. Just a few well-picked ones, and the discipline to keep your data clean and current.

Frequently Asked Questions (FAQ)

Q1: What exactly are public comps used for?

Public comps help estimate a company’s fair market value by comparing it to publicly traded companies in the same industry. Investors, analysts, and corporate buyers use them when valuing both private companies and public ones, especially in M&A, IPO prep, and internal strategy.

Q2: How do you choose the right comparable companies?

Start with similar companies based on size, business model, revenue stream, and industry. Look at company’s sales, profit margins, and growth rate, but also consider intangible things like market positioning or customer churn. Avoid using aspirational peers just to get higher multiples, it skews the company valuation.

Q3: Are public comps more reliable than discounted cash flow (DCF)?

They serve different purposes. Discounted cash flow DCF gives a customized estimate based on future cash flows and a company’s specific risk profile. Public comps, on the other hand, reflect market value grounded in real-time data. Most teams use both for cross-checking.

Q4: Can I run public comps on private companies?

Yes actually, that’s one of the most common use cases. Since private company valuations lack public trading data, analysts rely on valuation multiples from public companies to estimate the present value of private markets deals.

Q5: Do I need expensive tools to build a comps model?

Not really. You can start with free SEC filings and Excel. That said, platforms like PublicComps.com and Capital IQ help a lot, especially when managing comps across several companies or complex transactions.

Conclusion

Public comps aren’t perfect. They can be messy, biased, and easily misused. But they’re also one of the most grounded, market-based ways to estimate fair market value, especially when you’re working with private companies that don’t have a company’s stock price to anchor their worth.

You’ve now got the full picture: how to choose comparable public companies, which financial metrics to track, how to calculate enterprise value, and how to avoid common traps. You also know which tools can help, whether it’s scraping the right data or keeping your valuation models safe and easy to share.

So, what next?

Maybe you revisit that comp set you’ve been sitting on. Or maybe you finally lock down your model and send it off with confidence. Either way, your valuations will get sharper not because you learned a new trick, but because you know how to apply an old one better.

And that’s what real analysis looks like.