SEC filings essential when analyzing guideline public company comps


There are common errors on the GPCM, as highlighted by Rob Schlegel, speaking at today's BVR/PitchBook webcast.   Obviously, you need to chose matches carefully for size, market niche, characteristics and other factors.  "We see a lot of failures to analyze the data," agrees Linda Trugman.  "there isn't enough analysis done and multiples are picked arbitrarily."   The use of averages without any analysis is a clear signal that there may be flaws with the analysis.   So is the presence of only 3-4 comparables, which obviously could be out of whack with the subject company.  "You really need to be going back to the SEC filings to make sure that the companies in your data set match well" said Trugman.  "Using coefficient of variation analyses on key metrics is an important step," agrees Schlegel, "or you'll end up with outliers that can easily defeat the value of your analysis."  Trugman, Schegel and Pitchbook CEO John Gabbert (BVR's partner on the PitchBook/BVR Guideline Public Company Comps Tool) further discussed how to best select the "best possible peer group."

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