Comparable Transaction

A comparable transaction (or "comp") is a completed business sale used as a reference point to establish a valuation range for a target business. Valuators identify transactions involving businesses with similar industry, size, geography, growth profile, and financial characteristics, then extract the implied valuation multiples paid.

In Canadian small and mid-market transactions, comparable transaction data comes from sources including the IBBA Market Pulse Survey, M&A Source Middle Market Report, BizBuySell Insight Report, and proprietary databases maintained by valuation firms. The comparability of transactions varies — differences in deal size, market conditions, buyer type, and business quality must all be considered when applying multiples from comparable transactions.

See also: ebitda-multiple" class="glossary-link">EBITDA Multiple, Business Valuation, Fair Market Value.