Market valuation approach mirrors discounted cash flow method, simplifying complex decisions.
The chapter discusses how the discounted cash flow (DCF) approach and the market approach are connected. It uses the EV/free cash flow to firm (FCFF) multiple to show this link. By applying the market approach, we need to address the same complex issues as in a DCF valuation, such as growth, margins, and risk. The market approach requires the same effort and decision-making as a cash flow valuation.