Comparable

A comparable is a reference company or transaction used to derive valuation multiples applied to a target company. The comparable company method is one of the three core business valuation approaches alongside DCF and the asset-based method. The quality of comparables determines the robustness of the conclusions: sector similarity, size, margin profile and geography are the key selection criteria. Adjustments may be needed to correct for differences in leverage, growth or specific risk.

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Example: to value a Swiss precision engineering SME (CHF 18.0 million revenue, 14% EBITDA margin), Hectelion selects 7 listed comparables in the precision mechanics sector and 5 recent transactions. The retained median multiples are 6.8x EBITDA (listed) and 7.5x EBITDA (transactions), applied to a normalised EBITDA of CHF 2.5 million — producing a valuation range of CHF 17.0–18.8 million, consistent with the DCF output.

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At Hectelion, comparable selection and justification is a rigorous, documented and defensible step in every valuation report.