Market-Based Valuation

Market-based valuation is a method of determining the value of a company, asset, or security based on the current market price of similar assets or comparable companies. This approach is commonly used in mergers and acquisitions, real estate, and stock valuations. Market-based valuation considers factors such as market multiples, recent transactions, and comparable company analysis to estimate the fair market value of an asset.

Example

A real estate investor uses market-based valuation to determine the value of a property by comparing it to similar properties recently sold in the same area.