Glossary · Reading the business
Market approach
In short
This valuation method estimates a business's worth by comparing it to similar businesses that have recently sold. As a buyer, it provides a crucial reality check on the asking price against real-world transactions.
What it means in a deal
An appraiser using the market approach will analyze transaction multiples (like price/EBITDA) from comparable businesses. You need to scrutinize the selection of these comparable companies to ensure they truly align with the target business's size, industry, and geographic market. This helps validate the business valuation.
Related terms
Common questions about Market approach
- What are the requirements for assigning secondary market loans through SBA Form 1088?
- How does a lender determine the fair market value of business equipment used as collateral?
- How does the SBA verify the fair market value of assets contributed as equity injection?
- How does a lender evaluate the market value of collateral when there are limited comparable sales?
- If a borrower contributes equipment as equity, how does the lender verify its fair market value?
- How does the SBA evaluate the fair market value of goodwill in a business acquisition for financing?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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