That's the Market Method

When it comes to valuing a business, most people overcomplicate it.

One of the most intuitive approaches is the market method.

Think of it like real estate.

You wouldn’t buy a house without asking: What have similar homes actually sold for?

Same idea in business.

A buyer is essentially saying:

“Businesses like this one have been selling for ~4x earnings… so that’s what I’m willing to pay.”

That’s the market method.

It’s not about theory.

It’s not about projections.

It’s about what real buyers have actually paid for similar businesses.

And that’s powerful because:

  - It reflects real-world behavior

  - It anchors expectations

  - It keeps valuations grounded

Of course, no two businesses are identical.

And if you want to know why some company’s sell for more than another with the same earnings?  

Stay tuned.