A closer look at common valuation approaches: Market-based approach.

This article from Dental Economics explores the market-based approach to valuing dental practices. The market-based approach involves using comparable sales data from similar dental practices to determine the value of a practice. This method is similar to valuing residential real estate based on recently sold houses in the same neighborhood. However, finding accurate and validated data can be challenging, especially in rural areas or new urban developments. The article also discusses two specific valuation methods under the market-based approach: public company comparables and precedent transactions. While the market-based approach has its advantages, such as simplicity and reliability, it also has limitations, such as the availability of data and the inability to capture unique features of a practice. Overall, the market-based approach is a statistically sound methodology for valuing dental practices. [Extracted from the article]