Finding industry benchmarks for non-traded companies

September 13, 2022

by a professional from Aarhus University in San Diego, CA, USA

I'm trying to find a way to find comparable company financials. This is easy to find for publicly traded companies, but what does everybody do, when it comes to smaller companies (I'm specifically looking at deal for an e-commerce company: $40 million annual revenue)? I know Dunn & Bradstreet is selling this service, but I have no faith in them. Is there a better service out there?.

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Reply by a searcher
from Northwestern University in Chicago, IL, USA

Generally speaking the only cost effective way to understand comparables is to 1) be in the market for awhile and gain an understanding of what is bad/good/average by seeing several deals, 2) talking to bankers/brokers/other investors (with whom you need to trust) who have been in the market awhile and can tell you that because they deal with private companies on a regular basis, 3) use public comps to understand what margins can look (as a rule of thumb public companies have to be run somewhat efficiently or active investors will com in)

Reply by a searcher
from Harvard University in Boston, MA, USA

Agree with Brett that the best source is precedent transactions of companies of a similar size/industry. Beyond bankers/brokers/investors, you might try talking with CEOs or CFOs of e-comm companies in the space (if you have any in your network). Even if their company is larger than the range you're looking at, if they've been running it for a while they might have a good sense of how valuation expectations will shift depending on the company's size/maturity.

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