| Course | GF540 Investment and Securities Analysis |
|---|---|
| Unit | Unit 8 |
| Paper type | Comparables selection memo |
| Length | About 820 words, 5 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | MS in Finance |
| Updated | October 2026 |
Free sample paper for GF540 Unit 8
Five In, Nine Out: A Unit 8 Comparables Selection Memo for a Veterinary Clinic Operator
[Student Name]
Purdue University Global
GF540: Investment and Securities Analysis
Unit 8 Comparables Selection Memo
[Instructor Name]
[Date]
The clinic operator, every peer and every multiple are composite and illustrative; the articles and textbook cited are real.
Memorandum
To: Portfolio Manager From: Equity Analyst Date: December 1, 2025 Re: Peer set and multiple for the veterinary clinic operator
Summary
Five companies are suitable peers. Their median enterprise value to EBITDA is 13.5 times, which implies a value of about $20.90 a share for the operator, within an interquartile range of about $19.00 to $22.40. The shares trade at $21.50, so on this measure they are fairly priced.
The Screen and Its Problem
An industry classification search for companies related to animal health returned fourteen names: pet food makers, an animal-health drug developer, a pet supply retailer, two pet insurers, a livestock feed producer and several clinic and practice operators. Industry codes group companies by what they sell or whom they serve, not by how they earn money. A peer set taken straight from the screen would mix businesses with very different margins, growth and capital needs, and the median would describe none of them. Research on peer selection finds that choosing comparables on the drivers of value, rather than industry labels alone, produces noticeably more accurate valuations (Bhojraj & Lee, 2002).
Criteria
The operator runs 340 clinics staffed by salaried veterinarians and technicians and grows mainly by buying independent practices. Five features drive its value, so peers should share them.
1. Revenue from services delivered in clinics, not from manufactured products.
2. Same-clinic growth of roughly 4 to 7 percent, driven by visit frequency and pricing.
3. Labor at roughly half of revenue, because skilled clinicians are the main cost.
4. Debt of about 3 to 4 times EBITDA, typical of roll-up strategies.
5. Growth through acquisitions of small practices, with integration as the main operating risk.
The Five Peers
Peer A, a veterinary hospital group operating about 600 clinics in the United States and Canada, the closest match on every criterion.
Peer B, a second veterinary group concentrated in emergency and specialty hospitals; higher margins but the same labor model and acquisition strategy.
Peer C, a dental practice operator, included because its economics, salaried clinicians, practice acquisitions and debt-funded growth, mirror the operator's closely even though the patients differ.
Peer D, an outpatient physical therapy operator, with similar clinic size, labor share and roll-up history.
Peer E, an optometry practice operator, which adds a small product line in eyewear but earns most revenue from clinical services.
The Nine Excluded
Three pet food makers: manufacturing businesses with commodity input costs. The animal-health drug developer: research-driven, with patent risk. The pet supply retailer: retail margins and inventory risk. Two pet insurers: underwriting businesses valued on book value and claims. The livestock feed producer: agricultural commodity exposure. One clinic operator in Europe: excluded because it reports under different accounting rules and its debt carries different costs. Each fails at least two of the five criteria.
Three of the five peers do not treat animals at all, yet they match the operator on every driver of value, while seven of the nine exclusions sell to pet owners and share the industry label but earn money in ways that would distort the median.
Choosing the Multiple
Enterprise value to EBITDA is used rather than price to earnings. The peers carry different amounts of debt, and enterprise value neutralizes that difference. Acquisitive companies also record large amortization charges on purchased customer relationships, which depress reported earnings by different amounts at different companies. EBITDA sits above those charges. Studies comparing multiples find that forward earnings measures generally perform best, but they also show that enterprise multiples are preferable when capital structures differ widely, as they do here (Liu et al., 2002).
The Multiples
The peers trade at 11.8, 12.6, 13.5, 14.2 and 15.1 times forward EBITDA. The median is 13.5 times; the lower and upper quartiles are about 12.6 and 14.2.
From Multiple to Per-Share Value
The operator's forward EBITDA is about $85 million and its net debt about $310 million, with 40 million shares outstanding.
1. At 13.5 times, enterprise value is about $1,148 million; less net debt, equity is about $838 million, or about $20.90 a share.
2. At 12.6 times, about $19.00 a share.
3. At 14.2 times, about $22.40 a share.
Cautions
Rent is a large cost for clinic operators, and some peers own more of their buildings than others, which flatters their EBITDA relative to operators that lease. A check using EBITDA before rent narrows the range slightly but does not change the conclusion (Damodaran, 2012).
Recommendation
Use the five-company set and the EV to EBITDA median in the valuation, and present the interquartile range alongside the cash flow estimate.
References
Bhojraj, S., & Lee, C. M. C. (2002). Who is my peer? A valuation-based approach to the selection of comparable firms. Journal of Accounting Research, 40(2), 407-439. https://doi.org/10.1111/1475-679X.00054
Damodaran, A. (2012). Investment valuation: Tools and techniques for determining the value of any asset (3rd ed.). Wiley.
Liu, J., Nissim, D., & Thomas, J. (2002). Equity valuation using multiples. Journal of Accounting Research, 40(1), 135-172. https://doi.org/10.1111/1475-679X.00042
Reading the GF 540 Unit 8 instructions
The eighth GF540 unit asks for a memo justifying a peer set and a valuation multiple. Start from the screen you used and explain why its raw output cannot serve as a peer group. State the criteria that drive the target's value, such as revenue type, growth, cost structure, debt and growth strategy. Argue each included peer in a short paragraph and give each excluded company a one-line reason. Choose the multiple that fits the group's differences in debt and accounting, and explain why alternatives are weaker. Report the peers' multiples, the median and a range, then convert them to a per-share value with the target's own figures. Note any adjustment that could change the result. End with a recommendation for the valuation. Cite research on peer selection and multiples in APA 7.
Inside the GF540 Unit 8 example
The memo opens with a summary giving the median, the implied value and the market price. A section on the screen explains why industry codes mislead, citing Bhojraj and Lee. Five numbered criteria follow, tied to the operator's salaried clinicians and acquisition strategy. Each of the five peers gets a paragraph, including three that treat people rather than animals, and the nine exclusions are grouped with reasons. The highlighted sentence states that matching value drivers matters more than sharing a label. A section on the multiple explains why enterprise value to EBITDA suits peers with different debt and amortization, citing Liu, Nissim and Thomas. The multiples, the conversion to per-share values and a caution about rent, citing Damodaran, precede a one-line recommendation.
Reading the GF540 Unit 8 grading rubric
GF540 graders reward peer selection that is argued rather than accepted from a screen. Stated criteria tied to the target's economics earn the first major share, and each inclusion and exclusion must follow from them. Choosing an appropriate multiple and explaining the choice against alternatives earns the next share. Correct conversion from enterprise multiple to per-share value, subtracting net debt and dividing by shares, is checked closely. Instructors in this MS in Finance course value research support for the selection method and attention to adjustments, such as rent, that could bias the comparison. A concise memo format with a summary up front and a clear recommendation completes the rubric, along with APA 7 references.
Common GF540 Unit 8 mistakes, and how to avoid them
Many GF540 Unit 8 memos accept every company the screen returns, producing a median that describes no one. Others pick peers by size or name recognition without stating criteria. Excluded companies are ignored rather than explained. Price to earnings is used for companies with very different debt loads or heavy acquisition amortization. Enterprise value is converted to equity value without subtracting net debt, or per-share values use the wrong share count. Rent differences between owners and lessees go unnoticed. Whatever target your prompt names, keep the memo's logic: screen, criteria, argued inclusions, explained exclusions, a justified multiple, a careful conversion and a recommendation.
Get a GF540 Unit 8 example written to your instructions
List the target your GF540 Unit 8 prompt names, any peer list or screen your instructor provided and the rubric. Each proposed peer is argued in or out against the target's economics, the multiple is chosen with reasons, and the range is carried through to a per-share value. The first custom sample carries no charge and is normally back inside 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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GF540 Unit 8 questions, answered
How many comparables does the memo need?
Enough to form a median that one company cannot swing, usually four to eight. The sample settles on five because the target's economics are unusual and adding weaker matches would dilute the set. A shorter list of well-argued peers is generally marked higher than a long one assembled from a screen, provided each inclusion is defended on its own terms.
Can peers come from a different industry?
Yes, if the economics match better than the classification does. The sample includes dental, physical therapy and optometry practice operators because they share the target's labor model and acquisition-driven growth. The memo says so explicitly and notes the one way each differs, so your grader sees a reasoned choice rather than a stretch made to fill out the table.
Why not use price to earnings?
Price to earnings is distorted when peers carry very different amounts of debt, since interest costs reduce earnings unevenly, and it cannot be computed for companies reporting losses. Enterprise value to EBITDA avoids both problems. The sample states this reasoning before presenting any figures, which most graders prefer to a multiple that simply appears in a table without explanation.
Where can I find a free GF540 Unit 8 sample paper?
This page carries a full GF540 Unit 8 comparables selection memo for a composite veterinary clinic operator, with criteria, five argued peers, nine exclusions, the multiple and APA 7 references.
How is the per-share value computed from the multiple?
Multiply the target's forward EBITDA, about $85 million, by the 13.5 times median to get enterprise value, subtract about $310 million of net debt, and divide by 40 million shares, giving about $20.90.