Comparable Company Analysis Questions

Free sample from the Deskcraft question bank

Built from conversations with hundreds of investment bankers about what they ask in interviews. Our sources

Comps are the valuation a bank actually runs every day, and the one that exposes a candidate who has only read the theory. These questions come from the Deskcraft bank and cover the whole chain: which multiple pairs with which metric, how a comp set is chosen, why precedents price higher, and how it all triangulates into a football field.

1. Walk me through a precedent transactions analysis.

Model answer

Identify past M&A deals involving similar targets, pull the transaction value and the target's metrics at announcement, and compute deal multiples like EV/EBITDA and EV/revenue. Take the median and apply it to your target. It reflects what acquirers actually paid, including control premiums and synergies.

2. Walk me through a trading comparables analysis.

Model answer

Select a peer set of similar public companies by industry, size, growth and margins, pull their market and financial data, and compute multiples such as EV/EBITDA, EV/revenue and P/E. Take the median and quartiles and apply them to the target's metric to imply a value, adjusting for differences in growth and profitability. It reflects current market sentiment.

3. What is a football field chart?

Model answer

A bar chart showing the valuation ranges from each methodology, such as trading comps, precedent transactions, DCF, LBO and the 52-week trading range, side by side. It triangulates value, showing where the methods overlap and the overall reasonable range rather than a single point.

4. What is a sensitivity analysis in a DCF?

Model answer

A data table showing how the output, usually implied share price or enterprise value, changes as you vary key inputs, most often WACC and terminal growth or exit multiple. It reveals how dependent the valuation is on assumptions and gives a defensible range instead of false-precision point estimates.