How Proving Your TAM Might Double Your Company’s Value

Total Addressable Market (TAM) and company value

How Proving Your TAM Might Double Your Company’s Value

When an acquirer evaluates your business, they’re looking beyond what you’ve built. As successful as your company may be, buyers need to see how much larger it can grow to generate a return on their investment. That’s where Total Addressable Market (TAM) comes in.

TAM is the total revenue opportunity available if you captured 100% of demand for your product or service. If your TAM is small—meaning the market for what you sell is limited—your growth prospects look capped. And if your market looks capped, so will your valuation multiple.

That’s the challenge Tad Fallows faced when he built iLab, a SaaS platform serving research labs at universities and hospitals. The product worked, customers were sticky, and margins were strong. But at first glance, iLab’s TAM looked limited, only a few hundred U.S. institutions fit the profile. Early acquisition offers reflected that ceiling, coming in at about 3x revenue.

Instead of taking the deal, Tad and his team went to work proving their TAM was larger.

The Tactic: Prove TAM, Don’t Just Pitch It

Buyers discount hypothetical growth stories. It’s not enough to say “we could sell internationally” or “we could upsell modules.” You need evidence. Here’s how Tad did it:

  • Go global (even in small steps). Signing just a handful of international customers proved iLab wasn’t limited to the U.S. market. Even a small share of revenue abroad reframed the company as a global solution.
  • Show new use cases. By launching add-on modules and getting paying customers, iLab demonstrated that existing clients would buy more. That turned one revenue stream into many.

These moves transformed iLab’s perceived TAM. Instead of being seen as a small, capped niche, they were able to show a pathway to a much larger market with far more upside.

The Payoff

With a larger, proven TAM, iLab’s valuation multiple doubled. What started as a 3x revenue offer turned into a 6x exit. That’s millions of dollars in difference, driven not by short-term sales tactics, but by reshaping how big acquirers thought the company could become.

And Tad’s story isn’t an outlier. According to Value Builder Analytics, companies that can easily expand into new geographies receive an average offer that’s 18% higher. In a study of 3,380 businesses, those that said it was “fairly easy” or “very easy” to replicate their business in another region received an average multiple of 4.1x EBITDA. Those that found it difficult averaged just 3.5x.

What This Means for You

Your company’s value is tied to its future potential. The bigger your TAM, the bigger the story but only if you can prove it.

Start small:

  • Land even one or two international customers.
  • Launch a pilot add-on to show appetite for more.

Do that, and you’ll raise the ceiling on your company’s value long before you think about selling.