Is it common to use the median multiple of public company comparables in valuations?

Using the median multiple of public company comparables in valuations is indeed a common practice, and its appropriateness can vary depending on the circumstances surrounding the specific valuation. The median, being less affected by extreme values than the mean, often provides a more reliable central tendency measure in data sets that may include outliers or skewed distributions. This characteristic makes the median particularly useful in valuation, where comparable company analysis aims to align a target company's value with those of similar publicly traded companies.

The specific context—such as the industry sector, market conditions, and the financial profile of the companies being compared—can influence whether the median is the most suitable measure. In some cases, analysts may choose to look at the upper quartiles when valuing high-growth companies or during bullish market periods to emphasize higher performance benchmarks, while in other contexts, relying on mean multiples could also be useful, particularly if a stable and evenly distributed data set is present.

Thus, recognizing that the use of median multiples can adapt to various situational factors is crucial in accurately applying valuations and understanding how different performance metrics interact within the analysis.