Question

What is the hardest part of the relative valuation process?

Answer 1

In relative valuation we find the ratios like P/E ratio, EBITDA/Sales ratio etc of comparable companies or tansaction in order to value our firm. Through this we get a market percieved value for our company.

But the difficult part or challenging aprt for us is to find such similar companies which is comparable to our firm. Ideally there is no firm which is easily comparable and we need to make constant adjustments and tactical decision for the companies to make comparable. Hence this is the most challenging part for relative valuation