Quick Answer
Bankers analyze a target through three lenses: individual company analysis (the standalone financial profile from 10-K / 10-Q / 8-K filings and a projected operating model), comparable company analysis (trading multiples of public peers used to triangulate value), and industry sector analysis (sector growth, margin trends, and the M&A cycle surrounding the company).
Before any single ratio or multiple, bankers frame the work using three analytical lenses. Each lens answers a different question.
Individual Company Analysis
Standalone review of one issuer or target using its own historical filings and a projected operating model.
- Source documents: Annual report (10-K), quarterly report (10-Q), current event filings (8-K)
- What it anchors:
- Revenue trajectory (growth rate, mix, seasonality)
- Margin profile (gross, operating, net)
- Capital structure (debt, equity, preferred, off-balance-sheet)
- Free-cash-flow generation (the foundation for a discounted cash flow valuation)
Think of it this way: Individual company analysis answers "what does this business look like on its own?" before you compare it to anyone else.
Comparable Company Analysis ("Trading Comps")
A set of similar publicly traded companies whose live market multiples triangulate where the subject company should trade.
- Public peers: Same industry, similar size band, similar growth profile, comparable geography
- Trading multiples: Enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA); price-to-earnings (P/E); enterprise value to sales (EV/Sales); price-to-book (P/B)
- Pure equity-market read on value: what investors are paying for similar businesses right now
Industry Sector Analysis
Aggregate view of the sector the subject company sits inside.
- Sector growth rates and where the cycle is (early-stage, mature, declining)
- Margin trends and competitive dynamics
- Mergers and acquisitions (M&A) activity (consolidation phase or fragmenting)
- Regulatory backdrop (new rules, antitrust posture, trade policy)
The sector view frames whether the subject company is a leader, laggard, or average performer relative to its peer group.
Exam Tip: Gotchas
- This unit is about ANALYZING the data, not gathering it. The collection step (10-K pulls, ownership filings, peer screens) lives in the prior unit. The same three lenses (single company, comparables, sector) appear in both, but here the work is building models and computing multiples, not pulling filings.
- "Comparable company" means trading multiples of public peers, not past M&A deals. Past deal multiples are precedent transactions (covered in a later section). The two are different analyses with different multiples.