How to Build a Comparable Companies List for a Private Company

A comparable companies list, or "comps", is a set of businesses similar enough to yours that their valuations, metrics or strategies tell you something useful. Bankers use comps to value companies. Founders use them to benchmark fundraising terms. Acquirers use them to sense-check prices. Strategists use them to understand a market. The quality of the conclusion depends almost entirely on the quality of the list.

This guide walks through how to build a defensible comps list for a private company, including where to find candidates, how to choose between them and how to document your reasoning.

Three kinds of comparables

Most real analyses use more than one type. A founder setting a seed valuation will lean on private funding comps. A business owner preparing for sale will lean on precedent transactions. Both may look at public companies for context.

Step 1: Define what "comparable" means for your purpose

Comparability depends on the question. Write down the characteristics that matter most for value or for the comparison you're making. Common dimensions:

• What they sell: product or service type.
• Who they sell to: customer type, industry and size.
• Business model: subscription, transaction, project-based, licensing.
• Size: revenue, EBITDA, headcount.
• Growth: recent growth rate.
• Profitability: margins.
• Geography: where they operate and sell.
• Stage: for startups, funding stage.

For valuation, business model, growth, margins and size usually matter more than surface-level similarity. A vertical SaaS company selling to dentists may be more comparable, for valuation purposes, to a vertical SaaS company selling to vets than to a dental equipment manufacturer.

Step 2: Build a long list

Cast a wide net first. Sources:

• Industry classification codes: NAICS or SIC codes help find public companies and some private ones in databases.
• Competitor mentions: the company's own website, sales materials and review site comparisons.
• Analyst and market reports: often list the main players in a segment.
• Startup and private company databases: keyword searches by description. See our PitchBook alternatives guide.
• Public company filings: annual reports name competitors in their risk factors and business descriptions.
• Trade associations and conferences: member and exhibitor lists.
• Investor portfolios: VCs often back several companies in adjacent spaces.
• M&A announcements: for precedent transactions, search for acquisitions in the sector over the last five to ten years.

Aim for 30 to 60 candidates on the long list.

Step 3: Screen to a short list

Apply your criteria. Score each candidate on the dimensions that matter, and remove companies that differ significantly on the most important ones. A good short list typically has 6 to 15 companies. Fewer can be fine if they're very close comparables. More can dilute the analysis.

"Reference only" is a useful category: companies that aren't close enough to include in the core set but help frame the range, such as a much larger public leader.

Step 4: Gather the data

For public companies

Annual and quarterly filings give revenue, EBITDA, growth and margins. Market data gives enterprise value. Calculate multiples consistently, for example enterprise value to trailing twelve months revenue and EBITDA, and note the date.

For precedent transactions

Look for announced deal values and, where disclosed, the target's revenue or EBITDA. Press releases, acquirer filings, industry news and paid databases are the main sources. Many private deals don't disclose values, so you may have fewer data points than you'd like.

For private funding comps

Round sizes, dates and investors are often public. Valuations and caps are disclosed less often. Paid databases, founder conversations and investor benchmark reports help fill gaps. See our guide on finding a company's investors.

For private operating companies

You'll often need estimates. Our guide on finding private company revenue explains how.

Step 5: Normalise

Comparisons only work if the numbers mean the same thing. Check:

• Time periods: trailing twelve months versus fiscal year versus forward estimates.
• Definitions: EBITDA versus adjusted EBITDA; ARR versus recognised revenue.
• Currency and exchange rates.
• One-off items that distort a single year.
• Deal structure: for transactions, whether the price includes earn-outs or assumed debt.

Step 6: Analyse and adjust

Calculate the range, median and mean for each metric. Medians are usually more robust than means because they're less affected by outliers.

Then adjust for differences between your company and the comp set. Private companies are generally valued at a discount to public companies because their shares are illiquid and they're usually smaller and riskier. Size matters a lot: see our guide on valuing small businesses with EBITDA multiples. A company growing faster than its comps may justify a premium. One with high customer concentration may warrant a discount.

Step 7: Document your reasoning

Write down why each company was included or excluded, where each data point came from and what adjustments you made. A comps analysis that can't be explained won't persuade an investor, buyer or board. Good documentation also makes it easy to update the analysis later.

Common mistakes

• Choosing comps for the answer you want. Investors and buyers will spot a cherry-picked set immediately.
• Surface similarity. Same industry label, very different business model.
• Ignoring size differences. Applying a large public company's multiple to a small private business.
• Mixing time periods, especially across very different market conditions.
• Too few data points, treated as if they were conclusive.
• Stale data. Valuation multiples move with markets. Update comps before using them.

Using comps beyond valuation

A well-built comps list has other uses:

• Benchmarking operations: margins, growth and efficiency against peers.
• Investor targeting: investors in your comps are natural targets for your raise. See how to build an investor list.
• Acquirer mapping: companies that bought your comps may be interested in you.
• Strategy: comparing positioning, pricing and product breadth.

A worked example: comps for a seed-stage startup

Notice that the comps aren't all physiotherapy software. Dental and veterinary practice tools share the same business model, customer size and sales motion, which matters more for benchmarking than the exact profession.

Presenting comps to investors or buyers

When you share a comps analysis, keep it simple and honest:

• show the full short list, not just the most flattering companies,
• show the range and median, not only the top end,
• explain briefly why your company sits where you place it in the range,
• cite sources and dates.

Experienced investors and acquirers will have their own comps. A transparent analysis that overlaps with theirs builds credibility. A selective one invites them to discount everything else you say.

Keeping comps current

Set a reminder to refresh your comps every quarter if you use them for ongoing decisions, and always before a fundraise or sale process. Add new rounds and deals as they happen, and remove companies that have changed business model or been acquired.