CompID database for TNMM and CPM benchmarking

RoyaltyRange has updated the latest CompID database for TNMM and CPM benchmarking studies with Global Listed Companies data. The main focus of the database is Transfer Pricing, which is reflected in the way data is treated, the workflow tools offered, and the detailed output.

Listed Companies data

Public companies are required to make their financials and various other information public. This is usually filed with the stock exchanges where they file, or with regulators like the SEC (U.S. Securities and Exchange Commission). Listed companies typically release their annual reports on their Investor Relations web pages. The financial reports that are published on stock exchanges or their websites are always reviewed and approved by an external accounting firm before publication. Listed companies usually report their financial statements according to the International Financial Reporting Standard (IFRS). This allows for a fair comparison of the financial performance of listed companies across different countries or regions. Compared to private unlisted companies, listed companies are subject to greater regulatory scrutiny and are required to disclose more detailed financial information.

Listed company data is often used in areas where there is limited or unreliable public-domain data on private unlisted companies. This type of data is recognized globally, including in Europe. However, private company data from Europe is strongly preferred, especially in areas that compare their operations to Europe.

Steps on using Listed Companies Data for TNMM

1. Identify comparable companies

• Industry and function: Use databases with specific industry codes (NACE 2.0, SIC) and filter by the specific function performed (manufacturing, distribution, R&D, etc.).
• Geography: Focus on companies with operations in similar markets as your controlled transaction.
• Size: Consider comparability in terms of revenue, asset base, or the number of employees.

2. Source the specialized database

• CompID by RoyaltyRange is a tailor-made database for Transfer Pricing analysis.

3. Extract relevant financial information

• Focus on net profit indicators: Operating margin, return on assets (ROA), and return on capital employed (ROCE) are key metrics for TNMM.
• Segment-level data: If available, analyze profit margins for segments mirroring the activities in your controlled transaction.

4. Comparability adjustments

• Differences in functions/assets: Companies with extensive R&D or valuable intangibles may have higher margins needing adjustment.
• Risk profile: Account for differences in economic risk borne by the listed company versus your controlled entity.
• Market factors: Adjust for specific market conditions (demand, regulations, etc.) affecting profitability.

5. Documentation

• Rationale for selection: Clearly explain why you chose specific listed companies as comparables.
• Adjustment logic: Document the reasoning behind any adjustments made to their financial data.

6. Using the OECD Transfer Pricing guidelines

• The OECD TP guidelines remain a core reference for how to correctly conduct the TNMM.

In case you’re interested in scheduling a demo to see our latest CompID database for TNMM and CPM benchmarking studies, click here to go directly to the request form.