Normally market based approach is used for the purpose of valuation but there are circumstances that do not suit such an approach especially in case of valuation of shares and securities—justify with your comments.

Normally, a strategic buyer adopts market based approach for the purpose of valuation. In case the shares in the company are listed in a stock exchange, market price method helps in evaluating the price in the secondary market. However, there are circumstances in which market based approach is neither suitable nor could be adopted. Valuation of a division of a company, if shares are not listed or thinly traded, if the object is to liquidate the company does not suit market based approach. Results will also be erratic if there are significant or unusual fluctuations. At times the valuer ignores the market price, if he is of opinion that the market price is not a fair reflection of the Company's underlying assets or profitability status. Market based approach is not at all suitable in cases of unlisted companies and private companies. Valuation of start-up companies are also beyond market based approach.