Lower Middle Market Comps
Hey all, if you've seen my previous posts I am working on advising my friends business in the lower middle market. His valuation is ~$20M. I am trying to gather comps as best as I can but obviously data for this small of businesses is tough to come by. I have access to Pitchbook so I am researching a lot. My question is about public comps. If I am selecting Public Comps that have similar business models and product offerings but have an EV of $3B (much higher than his company's ~$20m) is that even a possible comp? Yes these businesses models are similar but there's just a massive gap in company size. Will these be helpful at all in using these as comps? Thanks!
Impossible to answer without more information. In general there will be a significant valuation discount for a lower middle market business vs. a public but this is not always the case.
Yes, there is typically a size premium involved with with large public comps. Maybe Fama-French model is a good place to start for you.
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