Pharmaceutical Industry Comps Template
Comparable company analysisComparable Company AnalysisHow to perform Comparable Company Analysis. This guide shows you step-by-step how to build comparable company analysis ("Comps"), includes a free template and many examples. Comps is a relative valuation methodology that looks at ratios of similar public companies and uses them to derive the value of another business also referred to as comps analysis or just comps is a relative valuation method. CFI’s pharmaceutical industry comps template provides several companies that can be used to value Roche Holding AG, a company in the pharmaceutical industry.
To download this free template, check out the CFI Marketplace: Pharmaceutical Industry Comps TemplatePharmaceutical Industry Comps TemplateThis free pharmaceutical industry comps template allows the user to perform a simple comparable company analysis within the pharmaceutical industry.
Comparable Company Analysis
Comparable company analysis is a valuation methodValuation MethodsWhen valuing a company as a going concern there are three main valuation methods used: DCF analysis, comparable companies, and precedent transactions. These methods of valuation are used in investment banking, equity research, private equity, corporate development, mergers & acquisitions, leveraged buyouts and finance that uses the financial ratiosFinancial RatiosFinancial ratios are created with the use of numerical values taken from financial statements to gain meaningful information about a company. The numbers found on a company’s financial statements – balance sheet, income statement, and cash flow statement - are used to perform quantitative analysis and assess a company of different businesses to assess and value a company. In this case, the company that is being valued is Roche Holding AG. Comps analysis is a relative form of valuation rather than an intrinsic form of valuationIntrinsic ValueThe intrinsic value of a business (or any investment security) is the present value of all expected future cash flows, discounted at the appropriate discount rate. Unlike relative forms of valuation that look at comparable companies, intrinsic valuation looks only at the inherent value of a business on its own. such as a discounted cash flow analysisDiscounted Cash Flow DCF FormulaThe discounted cash flow DCF formula is the sum of the cash flow in each period divided by one plus the discount rate raised to the power of the period #. This article breaks down the DCF formula into simple terms with examples and a video of the calculation. The formula is used to determine the value of a business.
Comps is a useful valuation methodology since it is relatively simple and straightforward to use. There are generally fewer assumptions that need to be made than in other valuation methods. In this pharmaceutical comps template, it is easy to see metrics such as EV/EBITDAEV/EBITDAEV/EBITDA is used in valuation to compare the value of similar businesses by evaluating their Enterprise Value (EV) to EBITDA multiple relative to an average. In this guide, we will break down the EV/EBTIDA multiple into its various components, and walk you through how to calculate it step by step and EV/Revenue for the industry.
Choosing Comparable Companies
The most important piece of a comparable company analysis is the selection of businesses that will be used to value the company in question. It is critical to identify and use companies that are most relevant to the company you are trying to value. In this case, companies have been selected to assess Roche Holding AG. In this template, several factors are taken into consideration which include:
- IndustryIndustryAn industry – or sector – is the whole of all economic activities by companies, people, and organizations involved in the production of goods and services for a particular field. Industries are usually categorized by the goods and services they produce. Classification
- Size
- Geography
- Growth Rate
- Profitability
- Capital StructureCapital StructureCapital Structure refers to the amount of debt and/or equity employed by a firm to fund its operations and finance its assets. The structure is typically expressed as a debt-to-equity or debt-to-capital ratio. Debt and equity capital are used to fund a business’ operations, capital expenditures, acquisitions,
This template is looking specifically at the pharmaceutical industry, therefore the industry classification has been matched. This template focuses on industry classification, size, and geography. It also takes into consideration:
- Similar size and geographical coverage
- Similar size and different geographical coverage
- Different size and similar geographical coverage
- Companies with similar business models
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