What Is Tessellate Worth? A Comparables Analysis
Finance
easy40 min0 submissionsMorgan Stanley
Scenario
Tessellate (developer tools, US) is preparing for a sale process. You have been asked to establish a valuation range using trading comparables.
The company. Revenue of $199 M, EBITDA margin of 28% (EBITDA of $56 M), revenue growth of 20%, and net debt of $83 M.
Trading comparables.
| Peer | EV/EBITDA | Revenue growth | EBITDA margin |
|---|---|---|---|
| Peer A — same sector, 3× larger | 8.1× | 5% | 23% |
| Peer B — adjacent sector, high growth | 9.8× | 37% | 15% |
| Peer C — same sector, declining | 8.9× | -4% | 16% |
The banker running the process has proposed simply averaging the three multiples.
Supporting data
target
- ebitda m
- 56
- revenue m
- 199
- net debt m
- 83
- ebitda margin pct
- 28
- revenue growth pct
- 20
comparables
| peer | ev ebitda | growth pct | margin pct |
|---|---|---|---|
| A | 8.1 | 5 | 23 |
| B | 9.8 | 37 | 15 |
| C | 8.9 | -4 | 16 |
Your task
Produce a valuation range. Provide:
- Analysis — which comparables you would use and why, and the resulting enterprise and equity values.
- Risks — where this methodology could mislead.
- Recommendation — your valuation range and the number you would take to the seller.
Critique the banker's proposed approach.
Ready to move forward? Up next: Ferro Industries: Two Projects, One BudgetNext question
How you'll be graded
100 points, 60% to pass.
- adjustments20
- peer selection25
- recommendation30
- multiple analysis25
Hint
Reveal suggested structure
- Screen the peers on growth, margin and risk — not sector label alone.
- Apply the defensible multiple range to EBITDA to get enterprise value.
- Bridge to equity value: EV − net debt.
- Adjust for size, growth differential and marketability.
- Cross-check with EV/Revenue.
- Present a range, and say where in it you would settle.