A company says its TAM is $50B from a published industry report. How do you pressure-test that in diligence?

How to answer

Rebuild it bottom-up: count the realistic number of customers in the serviceable segment and multiply by an ACV the company can actually charge — top-down headline TAMs are usually inflated by including adjacencies the company can't serve. Strip TAM down to SAM (right segment, geography, willingness to pay) and then SOM (what's winnable given competition and sales capacity). If bottom-up SAM is a small fraction of the cited TAM, the growth runway is thinner than the pitch implies — a key risk for a minority growth bet.

Key idea: Rebuild bottom-up (customers x ACV) and compare to the cited headline.