Regardless of the asset under valuation, the market approach looks at the
prices of comparable assets and makes proper adjustments for different
quantities, qualities, or sizes. For instance, when you want to determine the
value of a share of stock, you should look at the recent selling price of
shares of stock that are similar. Since ownership shares of a company are
usually identical, the recent selling price of the shares will provide a good
estimation of their fair value.
The above-mentioned business valuation method is also referred to as the
market comparison approach or the market-based approach. It is one of
the three valuation methods used to estimate the value of an entity. The
other two include the Income Approach (Intrinsic Value or DCF
Analysis) and the Cost Approach.
Market Approach Methods
There are a number of valuation methods that may be used by a valuation
