Understanding how an Opportunity compares to its Peers is an important step in creating institutional quality capital markets positioning. Institutions make decisions within a context and there is almost always another alternative. Create a Peer Analysis and impact your outcomes.
Peers are other Opportunities that have similar characteristics that can be used as a benchmark for understanding a target Opportunity’s relative benefits. For instance, if there is an Opportunity is to invest into the shares of a company and there is a question about share valuation, a Peer Analysis would show similar companies’ share valuations. If these Peers have higher share valuations than the target Opportunity valuation, the analysis will support the Opportunity valuation and would highlight the attractiveness of the target Opportunity valuation.
Peer Analysis includes “Strategic Peer Analysis” as well as “Financial Peer Analysis”. Strategic Peer Analysis focuses on the Peer Qualitative Variables of and Financial Peer Analysis focuses on the Peer Quantitative Variables.
It is usually better to understand Peers rather than to position “as the only one”. If there has never been a market for a product, it’s hard to convince that there will be a market. Even with disruptive technologies, there are usually other ways to serve the market and the Peer Analysis is about showing the transition to better technology.
In addition to identifying and analyzing Peers and the relevant variables used to compare them, the analysis is most effective when there is strong supporting information (Due Diligence information). This due diligence support can come from a variety of places including websites, public information, regulatory filings, etc.
A Capital Provider, if they are serious about the Opportunity, will be doing their own Peer Analysis and it’s better if you can influence their Peer Analysis conclusions by presenting your own thoughtful and supported Peer Analysis.
A Simple Peer Analysis Framework includes:
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Contact us if you have questions on how to construct a Peer Analysis – we have additional tools.