How to do Comps Valuation like a Banker
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- čas přidán 27. 07. 2024
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Comps valuation is one of the primary ways to value businesses. In this video, we'll walk step by step how do build a comparables analysis just like you would in investment banking. We are doing a case study on TikTok, in which we'll choose comps, pull their market data from Atom Finance, and then determine what multiples they are trading it.
0:00 - Intro
1:36 - 1. Determine Comps
2:19 - 2. Aggregate Data (Using Atom Finance)
4:12 - 3. Select Valuation Metrics
5:53 - 4. Benchmark Information in Excel
8:22 - 5. Imply Valuation of TikTok
Peak Frameworks is a business career prep service started by Matt Ting and Patrick Fong, who have each spent several years working in investment banking and private equity in New York and Silicon Valley. Matt and Patrick met at Evercore, a top tier investment bank, and over the years have tutored and coached dozens of candidates to land their dream business job.
Matt Ting: / matthewting
Patrick Fong (HBS 2021): / patrick-fong-0b773041
#InvestmentBanking #PrivateEquity #Valuation
Short and sweet! Very helpful, thank you!
Great video. I hope you can also do a video on small (main street) business so we as investors can assess how the local business are doing in the markets. Thanks for posting it -really liked it!
This was a great video. Nice one 👍🏼
Thanks for the walkthrough!
I can see Rosenbaum & Pearl influenced this video. Great content!
Gotta learn from the best!
Nice video, very useful!!
More videos like this!
Good general format though, think that's a very common general approach to showing comps
Where did the (-8.5 B) come from in the equation to get the implied value?
Good stuff
Amazing can you do DCF and precedent transactions example as well thanks
We have a DCF video on our channel! czcams.com/video/OY_UiA1EQqk/video.html
Precedents video not in the pipeline, but mechanically very similar to comps.
Straight out of rosenbaum & pearl lmao; love it. It’s great using templates on the job
Hi! Great content, appreciated it; THANKS! I have a question: While doing the valuation for a startup searching for a VC, do you think I should use market data, share price, etc. as you do in the video? Cause neither the startup nor its competitors/comps are private equity firms, thus they don't have any share prices yet. Do you think its competitors' valuations or investments would be enough as a metric?
As you said, you won't be able to imply a share price of a private company. You can still use a public comps table to approximate what the value of the private company will be though. E.g. you'll get an EBITDA multiple from the public comps and you apply that to the private company. This is the analysis IB analysts do when seeing what a private company can IPO at. Good question!
@@PeakFrameworks Thanks for your reply!
from where you got these ebitda and revenue multiples? how are they calculated? not clear at all
Great video. I was wondering, when you press Ctrl 1 to format a cell. How do you so quickly move around the menu using your keyboard?
Years of practice and memorizing different alt codes. You can also toggle different option / menus by pressing the underlined letter in the window pane.
Great video, any HF lessons coming soon? (EB analysts trying to move to HF)
How you like EB? I’m at BB looking to move over
I never worked or interviewed for HF, so I'm a bit hesitant to post anything too specific. I can do general skills like screening for companies and this, etc., but hard to do anything too detailed.
can you do an excel keystrokes video?
Oh good call! Yes.
Personal advice : become a voice artist you'll definitely rock!!!!! People have no idea how much money they can actually save via youtube... Thanks buddy.....
Have you all released an Investment Banking course yet?
Probably on the calendar for 2022, this year our upcoming course is focused on university students and valuation.
Do you have to calendarize your comparable companies and find the last 12 months figure for them? If so, how do you do it? I am a bit lost on those parts.
You don't have to do last twelve months for simple analyses, but you will have to on the job.
You essentially have to go through the filings and type out what the company did each quarter, then sum it up. So you have to go through a company's last couple of 10-Q's.
@@PeakFrameworks another question. Do you calendarize each company first, then find the last 12 months. For example, if I'm evaluating Chegg and its fiscal year ends January 31st, do I have to make other company's with different fiscal year endings have the same fiscal year ending as chegg. Then I can calculate the last twelve months figures for all comparables?
Also, can I just pull out the last 12 months figure from sites like Yahoo Finance and Morningstar instead of calculating them?
I want to be in equity research analysis, so I probably need to know the proper way to do comparable analysis.
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Please explain how you were able to take the median and average of the valuation x multiples. My excel keeps giving errors!
You should be able to multiply directly. Make sure you convert the data to numbers, as it's exported in text. This fix is covered in the video.
@@PeakFrameworks oddly enough it is converted to numbers... weird
Why are you using NTM and not LTM??
are there any tools that you use for Canadian stocks
I use Atom Finance for Canadian stocks too! I don't invest as much in TSX companies maybe as I should though, mostly just do ETFs.
at the end why did you use the median ebitda multiple and not the the avg?
Both would be perfectly reasonable. I like median more if there's a wide spread between multiples. I went with median here because it's a bit lower so I get a more conservative result.
I have a question, whether tiktok is an app or a company. whether tiktok now in united states is an independent company or not. last question, if tiktok is an app, is it suitable to use comps to value an app?
TikTok is an app and is owned by ByteDance. I don't think TikTok ended up becoming independent in the U.S. Yes, you can use comps to value an app.
Why not use the revenue multiple?
It seemed a bit too aggressive for the valuation. Estimated ~$50B of TikTok revenue in 2021 and a 6-7x revenue multiple = ~$300B+ EV, which is is more than all of ByteDance was rumored to be valued. I think a lot of growth tech is valued off of EV / Revenue, so definitely good to be aware of what it is.
A week pasted by, I am still waiting for new video , video about hedge fund :)
Unfortunately I'd say to not count on it, I haven't worked in the HF industry so there's nothing in the pipeline about them
Can we have access to the excel file please?
It's in our Valuation and Finance Starter Kit course, but not publicly available.
You are using the wrong green
why don't you include the P/E multiple
I didn't here because the P/E multiples for a lot of these companies were crazy high and these fast growing tech businesses don't always trade on P/E.
Please explain to me why you are dividing an equity value by revenue and ebitda. Equity value should only be divided by bottom line net income as it is after debt. On the other hand, Enterprise value should be divided by revenue & ebit or ebitda, as it is before debt in the cap structure.
I am not dividing equity value by revenue or EBITDA. EV stands for enterprise value.
atom finance is no longer useable by retail investors :(