What is Pratt's Stats primarily used for in business valuation?

Pratt's Stats is primarily utilized in the market approach to business valuation as it provides a comprehensive database of industry-specific valuation multiples. This resource aggregates data from transactions and valuations of privately held companies, offering critical insights into how similar businesses are valued in the market. By using Pratt's Stats, a business appraiser can effectively identify appropriate benchmarks and ranges for valuation multiples applicable to the subject company, which assists in establishing a fair market value based on current transactional data.

The market approach is inherently comparative, relying on direct comparisons with other businesses to determine value. Pratt's Stats enhances this process by providing empirical data that reflects real market trends and conditions, making it a valuable tool for appraisers seeking to substantiate their valuations with concrete evidence from the marketplace. This reliance on actual transaction data helps ensure that the appraisals are aligned with current market realities, which is crucial for stakeholders involved in buy/sell transactions or investment decisions.