What significance do median multiples have in comparing your company to public comps?

Median multiples are crucial in comparing your company to public comparables because they serve as benchmarks that reflect the market's valuation of similar companies. When analyzing median multiples, you are looking at how the average market participants value companies with similar growth rates and profit margins.

By focusing on these medians, analysts can identify a range of valuation multiples—such as Price-to-Earnings (P/E) or Enterprise Value-to-EBITDA (EV/EBITDA)—which are derived from a set of comparable companies.

This comparative analysis helps to understand how your company's specific growth prospects and profit margins align with those of its peers. If your company has higher growth rates and margins than the peers, it might justify a higher multiple, indicating an appropriate valuation aligned with its potential. Conversely, if your company's metrics are lower, the market may value it at a lower multiple. Thus, using median multiples allows for a nuanced understanding of where your company's valuation stands relative to others in the same industry.