How do I find the right companies for a comparable analysis?

When conducting a comparable analysis for a private company in Series B, here's how you can approach it effectively:

1. Start with Public Companies:
   Public companies are often the go-to for comparable analysis because their financial data is readily available. Look for companies that share similar characteristics with your target, such as:

   • Industry or sector.
   • Business model (e.g., SaaS, marketplace, etc.).
   • Growth stage (as close to Series B as possible, though this can be tricky with public companies).
   • Revenue size and growth rates.

   Public comps are particularly useful for establishing valuation multiples like EV/Revenue or EV/EBITDA, which you can then apply to your private company.

2. Private Companies as Comps:
   While public companies are easier to analyze, private companies can provide more relevant benchmarks, especially if they are closer in size, stage, and market focus. However, finding reliable data on private companies can be challenging. Here are some tips:

   • Use industry reports: Platforms like CB Insights, PitchBook, or Crunchbase often provide insights into private company valuations and funding rounds.
   • Estimate revenues: You can triangulate private company revenues using methods like:
     • News articles or interviews where executives mention sales figures or customer numbers.
     • Revenue per employee estimates (common in certain industries).
     • Industry averages for similar-sized companies.

3. Focus on Specific Metrics:
   For a Series B company, revenue multiples (e.g., EV/Revenue) are often more relevant than profitability metrics like EBITDA, as these companies are typically not yet profitable. Additionally, consider SaaS-specific metrics if applicable, such as ARR growth, LTV/CAC ratios, and churn rates.

4. Tailor Your Comp Set:

   • For public companies, prioritize those with similar growth rates and business models, even if they are larger in size.
   • For private companies, focus on those in the same funding stage or with similar market dynamics.

5. Challenges with Private Data:
   If private company data is too sparse, relying on public companies is a valid approach. However, be mindful of the differences in scale and adjust your multiples accordingly. For example, smaller, high-growth private companies often command higher multiples than their larger, more mature public counterparts.

6. Alternative Sources:

   • Use platforms like CapIQ or FactSet for detailed public company data.
   • Explore niche industry publications or databases for private company insights.
   • Check investor presentations, conference call transcripts, or even Glassdoor for indirect data points.

By combining public comps with any private data you can gather, you'll create a more robust and defensible valuation analysis.

Sources: Valuing a small privately held services company, Basic Guide Ramping Up On A Company With Public Information Part Three, Private Equity Recruiting Process (From Banking), Q&A: Technology IB Analyst, How on Earth to put together company profile for a private company?