The comparables approach is a two-step process.

First, we compare one company to other companies by identifying firms of the same or similar size, geographic area, potential for growth, profitability, and risk profile, among other traits.

Second, we compare one transaction to other transactions by identifying transactions involving comparable companies in the same general time frame and using the same or similar terms, conditions, and modes of payment.

And beyond these points of analysis, both comparisons involve an understanding of  valuation multiples.