Meaning and transaction use
UK government guidance treats TAM, SAM and SOM as linked, evidence-backed views of market size and asks businesses to explain customers, location and buying behaviour. [S1]
A UK government-backed feasibility report describes SAM as focusing on the portion of an addressable market relevant to the proposed solution. That project example does not define every commercial market. [S2]
Proposed control method: start from the reconciled TAM, apply documented product, regulatory, geographic and channel filters, remove overlaps and compare the result with actual pipeline and customer evidence.
Worked example
Illustrative market sizing only. Assume TAM of USD 160 million. The current product serves 60% of demand and the present geographic footprint reaches 50% of that eligible demand.
Scroll the table horizontally to view all columns.
| Measure | Calculation | Result |
|---|---|---|
| Product-eligible demand | 160 million x 60% | USD 96 million |
| SAM | 96 million x 50% | USD 48 million |
| SAM as share of TAM | 48 / 160 | 30.0% |
| Illustrative revenue at 4% of SAM | 48 million x 4% | USD 1.92 million |
The filters produce a USD 48 million SAM. The 4% case is illustrative and still requires competition, capacity, conversion and timing evidence.
Proposed transaction review process
Reconcile TAM
Confirm the total boundary and underlying units.
Apply serviceability filters
Document product, geography, regulation, channel and customer constraints.
Remove overlap
Use segment-level counts where filters are correlated.
Compare with execution
Test the SAM against pipeline, capacity, sales cycle and realised demand.
Evidence checklist
TAM bridge
Approved TAM model and source register.
Eligibility rules
Product specifications, licences, customer criteria and exclusions.
Reach evidence
Distribution footprint, channel contracts, sales capacity and delivery data.
Commercial evidence
Qualified pipeline, conversion, churn, usage and realised pricing.
Decision framework
| Situation | Proposed action |
|---|---|
| A geography is planned | Keep it outside current SAM until entry requirements and delivery capacity are evidenced. |
| The product roadmap adds capability | Create a future scenario and retain the current serviceable baseline. |
| Filters overlap | Model customer segments directly rather than multiplying broad percentages. |
| Pipeline exceeds modelled SAM share | Check duplication, timing, qualification and market-boundary assumptions. |
Common errors to check
- Treating planned capability as currently serviceable.
- Applying overlapping filters as independent percentages.
- Calling SAM a sales forecast.
- Using pipeline value without probability, timing or duplication controls.
Reconcile the serviceable market
Bring the TAM model, eligibility rules, operating footprint and commercial evidence to a SAM review. Separate current reach from planned expansion and obtainable share.
Discuss the transactionPrimary references and editorial scope
- GOV.UK: Investor Readiness Essentials
Evidence-backed TAM, SAM and SOM and customer-market definition. Reference checked 17 September 2026. - GOV.UK: Bennamann phase-one feasibility report
Applied distinction between total and serviceable addressable markets. Reference checked 17 September 2026.
General venture-capital education. Figures are hypothetical. Serviceability, customer eligibility, regulation, pricing and obtainable share require current company and market evidence.
General business information. Obtain advice appropriate to the legal, tax, accounting and financing facts. No offer, lender commitment or transaction outcome is represented. All worked examples use expressly assumed figures. Editorial draft date: 17 September 2026.
