Show Notes: James Agres is the founder of  2nd St Strategy, an independent consulting firm focused on private equity and commercial due diligence work. He has experience in various industries, including software, industrial, and healthcare. James discusses the importance of market sizing in commercial diligence projects. In this episode, he talks about the importance of market sizing varies project to project, and how it helps businesses understand the size of opportunities available to them. A large market can represent a large opportunity, while a small opportunity may be more limited. James explains that understanding the market's competitive dynamics, market share, and growth drivers is crucial for businesses. James shares the different terms for market size, such as total addressable market (TAM), serviceable addressable market (SAM), and serviceable obtainable market (SOM). The total addressable market is the total population of the town, the number of haircuts, and the price of the haircut. The serviceable addressable market is the percentage of the town represented by men in a certain income demographic or willing to spend a lot on haircuts, and the serviceable obtainable market is the percentage of the town represented by men in a certain income demographic or willing to spend a lot on haircuts. Determining Market Size James explains that to reach the desired audience, businesses must advertise to the entire town or reach specific demographics and geography within the town. He talks about various market sizing approaches, including price times quantity and quantity times price, by segment. He explains that the most basic market sizing framework is price times quantity, which can be applied to dental practice management software. The market size is about half a billion, with 138,000 stores in the US and a close-to-100% adoption rate. He offers another example of software used to manage reservations at state, national, and local parks in the US and Canada. The market size can be estimated using various methodologies, such as the p times q methodology, which uses data on visitor numbers, pricing, and vendor percentages. The state parks and target organizations can also be used to determine their market share and percentage charges. James presents various market sizing approaches, including price times quantity and quantity times price, to analyze the market size of various industries. By utilizing these methods, he aims to provide a comprehensive understanding of the market size and competitive landscape in the dental practice management software market.  Estimating a Company’s Market Share The second method involves estimating a target company's market share based on their revenue. This method assumes that all competitors operate similarly to the target company. This method can be applied to the rest of the market, as well as to the target company's market share. The third method involves estimating the adoption rate of a product or service. For example, the market for waffle service is a complex one, with 680,000 restaurants in the US and a significant number of hotels and restaurants. To estimate the percentage of restaurants serving waffles, various methods are used, such as industry interviews, menu data, and analysis of menus. The adoption rate of about 10% is crucial for market size sizing, as it is often the hardest variable to determine when considering price and quantity. James advises that, In the context of due diligence, it is essential to gather data and make critical assumptions to determine the pricing of a target. This can be achieved through various methods, such as talking to customers, analyzing restaurant and hotel data, and contacting competitors or market participants. Where to Get Good Quality Data In industries where the quantity is not well-known, such as the number of dentists, it is possible to get the quantity side of the equation by using good quality data. This can be obtained from sources