Valuation methodology
The art of the comp: benchmarking a business against what sold
A comparable is only useful if a buyer would genuinely have considered it an alternative to your business. Most bad valuations begin with a peer set chosen for convenience rather than resemblance.
What the archive holds
The comparables set contains over 10,000 recorded transactions dated from 2 September 2014 to 1 July 2025. It records deals that were reported, not a complete census of the market. Private transactions that were never disclosed cannot appear in it, and disclosure skews towards larger and institutionally-owned businesses.
Every record carries a deal value. Only about a fifth carry a disclosed EBITDA multiple, because most parties do not publish earnings. That makes the set strong evidence of what changed hands and for how much, and much thinner evidence of what multiple was paid.
Step one: finding true peers
The quality of the valuation is capped by the quality of the peer set. Four filters do most of the work:
- Industry, specifically. “SaaS” is a category; “B2B marketing automation SaaS” is a peer set. A pizza franchise is not comparable to a fine-dining restaurant.
- Scale. Compare businesses of similar revenue and earnings. A $500K-revenue business does not trade on the same multiple as a $10M one, and size alone can account for several turns.
- Recency. Prefer transactions from the last one to three years. Credit conditions move multiples, and a deal struck five years ago was struck in a different market.
- Geography. Largely irrelevant for online businesses, decisive for anything with premises and a local customer base.
Step two: adjusting for difference
No two businesses are identical, so the peer multiple is a starting position to be argued up or down against your specifics. Work through both columns honestly; a valuation that only finds upward adjustments is a wish, not an analysis.
Argues the multiple up
- Margins consistently above the sector
- Sustained revenue growth, evidenced over several years
- A high share of contracted or recurring revenue
- Low customer concentration: no client above roughly 10% of revenue
- A management team that stays after completion
- Proprietary technology or defensible intellectual property
Argues the multiple down
- Declining revenue or compressing margins
- Heavy dependence on the owner's relationships
- High customer churn
- Deferred capital expenditure or ageing equipment
- Unresolved legal, tax or regulatory exposure
As an illustration of how wide the resulting band can be, the same sector can reasonably support a spread like this once those adjustments are applied:
The band, not the midpoint, is the honest answer. Anyone quoting a single figure for a private business is describing their confidence, not the market.
What comparables cannot tell you
A comparable knows the price and, sometimes, the multiple. It does not know the deal structure: how much was cash at completion, how much was deferred, how much sat in an earn-out that may never have paid. Two transactions at the same headline multiple can deliver very different outcomes to the seller.
Nor does a comparable know the buyer's reason. A strategic acquirer buying a customer list, a competitor removing a rival, or a platform completing a roll-up will each pay for something specific that no benchmark captures. Comps establish the range within which a conversation happens. They do not set the price.
Working the archive
The comparables database is filterable by sector, size and date. Treat any multiple distribution you draw from it as indicative of the disclosing subset rather than of the whole market, and read the methodology before quoting a figure from it.