Peer Group Selection

This problem practices how to think about peer selection in relative valuation, which is a core skill in investment banking interviews because comps are only useful if the companies being compared are genuinely similar. Candidates need to explain that good peers are chosen first on operating similarities, such as industry, business model, products, customers, distribution, market position, and exposure to cyclicality or seasonality, and then on financial similarities, such as size, margins, growth, leverage, and returns. Interviewers ask this question to see whether you understand that valuation is not just about finding companies in the same sector, but about identifying businesses that share the same operating drivers and financial characteristics so the multiples are meaningful.