I am trying to do a company comparable analysis for a pre-packaged software company with a market cap of 3 mln usd. It's operations are worldwide (Europe, Latin America, US).
I am trying to find comparable companies for it. My questions are:
Is it ok to use SIC numbers as a main indicator to find comparable companies?
Is it possible to compare a 100 mln usd market cap company to 3 mln usd market cap company in absence of other competitors?
What about using a Frankfurt-based company with a similar market cap and geography for consumers?
What is the best approach to find the comparables if none of the above work?
Any feedback is helpful!
I find it somewhat hard to believe that a "software company" of any size has no competitors, unless you're dealing with a narrow niche. In that case all bets are off.
For your Frankfurt company.....maybe if the value drivers are similar. However make sure that both are using the same reporting format (IFRS/GAAP) or you may have some ugly adjustments to make.
Thanks for the reply. Generally when you compare companies like this, market cap size should be comparable as well, right? I am just really not sure if I should keep the 100 mln cap company as a comparable.
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