q-fin.STAug 12, 2026

What Makes a Peer? Valuation-Anchored Similarity in Private Markets

Authors: Sebastian FrankJingrao LyuMax JarmeyPreetha SahaMingshu LiSweet KaurSola AkinolaDhagash Mehta

Abstract

As more investors contemplate private markets and contend with limited transparency, sparse disclosures, and infrequent transactions, identifying economically meaningful peer companies for comparison is a fundamental challenge for valuation, due diligence, portfolio construction, and risk management. We propose an ensemble tree-based supervised similarity learning framework that defines company similarity through the lens of market valuation rather than static feature matching or semantic descriptions. Specifically, we train a CatBoost gradient-boosted decision tree model on observed private company valuations and derive a valuation-aware similarity metric from importance-weighted leaf-node co-occurrences across the ensemble. The similarity metric captures shared valuation drivers while accommodating nonlinear relationships, mixed data types, and pervasive missing data common in private markets. Using a global private-market universe of approximately 270,000 companies, including more than 53,000 firms with observed or derivable post-money valuations spanning multiple industries, geographies, and deal stages, we demonstrate that the proposed similarity framework improves upon traditional distance-based and text-embedding-based approaches in downstream k-nearest-neighbor valuation tasks in the evaluated industry groups, while retaining case-based explainability.

Explore similar work

CardsList
  1. Human Preference aligned Tabular Similarity

    Jul 27, 2026Frederik Hoppe, Astrid Franz, Marianne Michaelis +2Semantic Similarity MetricsGlobal Embeddings