Know Your Market: How to Map Your Market Position Before Selling the Business

While a competitor analysis looks at who you compete with, a market analysis is about something broader: how big is the market as a whole, how is it developing, and how much of it does your business make up? Being able to answer those questions precisely is one of the clearest ways to show that a business is run strategically and deliberately — and it's something any serious buyer will dig into before a deal is completed.

What is a market analysis?

A market analysis is a systematic method of gathering and interpreting information about a market — its size, growth, segments, customer behavior and competitive situation. It differs from a competitor analysis by looking at the market as a whole, not just the individual competitors within it.

TAM, SAM and SOM: How to size the market

A recognized and widely used method for putting concrete figures on market size is the TAM/SAM/SOM model:

• TAM (Total Addressable Market): The total market for your type of product or service, if you could in theory reach every potential customer.
• SAM (Serviceable Available Market): The part of TAM you can genuinely serve, based on your business model, geography and target audience.
• SOM (Serviceable Obtainable Market): The realistic share of SAM you can actually expect to win, given the competition and your own resources.

Being able to put concrete figures on all three levels makes it possible for both you and a potential buyer to assess whether there's genuine growth left to capture, or whether you already have a large share of the market you can realistically reach.

Where do you find data for the market analysis?

A good market analysis combines several data sources:

• Secondary data: Industry reports, figures from national statistics agencies, trade associations and publicly available accounts from comparable businesses. This gives quick, broad insight.
• Primary data: Your own customer interviews, surveys, or direct dialogue with customers and partners. This gives depth and a more current understanding that secondary sources often don't capture.

The combination of the two gives the most robust picture — and is also something you can document and refer to if a buyer asks about the basis for your assessments.

What should a market analysis specifically answer?

• How big is the market today, measured in revenue or number of customers?
• Is the market growing, stagnating or shrinking — and at what pace?
• What segments exist, and which of them do you serve today?
• What market share do you actually have, and how has it developed over time?
• Are there structural changes coming — technological, regulatory or behavioral — that could fundamentally change the market?

Why is this relevant when selling a business?

Growth potential is one of the factors that weighs most heavily for a buyer when setting the price on a company. If you can document that the market is growing, that your market share is stable or increasing, and that there's still untapped potential (the gap between SOM and SAM), it strengthens the narrative that the business has a future to grow into — not just a past to continue. This is closely tied to the goodwill a buyer is willing to pay on top of the pure accounting figures — and it's often the difference between a business that sells quickly, and one of the many businesses for sale that sits on the market for a long time.

Conversely, a buyer who discovers during due diligence that the market is stagnant, or that the business's share is declining without a clear explanation, will often use it as an argument for a lower bid — or in the worst case, walk away from the deal. If you can present an honest, well-substantiated market analysis yourself, you stand markedly stronger in that conversation.

Frequently asked questions

Should a market analysis be done before I even consider selling?

It's a good idea to have it ready regardless, as part of ordinary strategic management — but it should at the latest be updated when you start preparing a sale.

Aren't market analysis and competitor analysis just the same thing?

They're connected, but not identical. The market analysis looks at the market as a whole; the competitor analysis looks specifically at the businesses you compete directly with. Read also our walkthrough of how to know your competition.

Can a good market analysis affect what I can sell my business for?

Indirectly, yes. It rarely affects the price alone, but it strengthens the narrative about the business's future potential, which is a recognized part of the basis for goodwill and for how much a buyer is willing to pay.

Want help putting figures on your own market potential before you sell? Book a no-obligation call with us.