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Chapter 10. Market Approach Valuation Methods


The following is an excerpt from The Executive's Guide to Business Valuation by valuation expert and M&A i-banker Justin Kuczmarski, MBA, CPA, CVA, CIRA, ABV. To view this free, 300-page guidebook, please click the blue link above to download.

Chapter 10. Market Approach - General Overview 

In Chapter 10, the basic theory and background of the market approach will be briefly introduced. The market approach is widely understood yet often misapplied. Nevertheless, the market approach and its applicable methods comprise the center of business valuation.

Why the Market Approach is Often Critical

Why is the market approach extremely pertinent? For lack of a better description, the market approach is essential to valuing any asset. However, its prominence in business valuation is rooted in how the market approach methods are also used as "sanity checks" in valuing private firms. In addition, the Public Company Method and the M&A Method constitute two of the three standard business valuation methods. This fact alone helps support the value indicators derived from either of these leading market methods.

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