{"ok":true,"canonical_url":"https://dealroom.so/glossary/market-approach","api_url":"https://dealroom.so/api/public/glossary/market-approach","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"market-approach","term":"Market approach","group":"Reading the business","definition":"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":"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.","url":"https://dealroom.so/glossary/market-approach","official_sources":[],"related":[{"slug":"valuation-report","term":"Valuation report","url":"https://dealroom.so/glossary/valuation-report"},{"slug":"business-valuation","term":"Business valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"multiple","term":"Multiple","url":"https://dealroom.so/glossary/multiple"},{"slug":"ebitda","term":"EBITDA","url":"https://dealroom.so/glossary/ebitda"}],"related_questions":[{"question":"What are the requirements for assigning secondary market loans through SBA Form 1088?","url":"https://dealroom.so/for-lenders/questions/what-are-the-requirements-for-assigning-secondary-market-loans-through-sba-form-1088"},{"question":"How does a lender determine the fair market value of business equipment used as collateral?","url":"https://dealroom.so/sba-7a/questions/how-does-a-lender-determine-the-fair-market-value-of-business-equipment-used-as-collateral"},{"question":"How does the SBA verify the fair market value of assets contributed as equity injection?","url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-verify-the-fair-market-value-of-assets-contributed-as-equity-injection"},{"question":"How does a lender evaluate the market value of collateral when there are limited comparable sales?","url":"https://dealroom.so/sba-7a/questions/how-does-a-lender-evaluate-the-market-value-of-collateral-when-there-are-limited-comparabl"},{"question":"If a borrower contributes equipment as equity, how does the lender verify its fair market value?","url":"https://dealroom.so/for-lenders/questions/if-a-borrower-contributes-equipment-as-equity-how-does-the-lender-verify-its-fair-market-v"},{"question":"How does the SBA evaluate the fair market value of goodwill in a business acquisition for financing?","url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-evaluate-the-fair-market-value-of-goodwill-in-a-business-acquisition-for-"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Market approach","url":"https://dealroom.so/glossary/market-approach","source_type":"DealRoom Data"}}