How Much Does a Business Valuation Cost?
To understand what a business is truly worth, we recommend a complete and comprehensive analysis that takes into account the specifics of the company and its industry. To help you better understand the process, here are a few responses to frequently asked questions.
Quite often, we get calls from business owners that want to sell their businesses and just want to know a reasonable listing price. Unfortunately, there is no quick-and-easy valuation. And, for those promising to do a valuation for $500 to $1,500 – well, you know the saying – you get what you pay for.
In cases like these, we can certainly look for data of similar companies that sold in that area and slap on a multiple or take a quick look at the company’s historical net income and apply a formula. However, the value range from this type of analysis is not reliable and is often useless.
To understand what a company is truly worth, one would need to complete a comprehensive analysis that takes into account the specifics of the company and its industry.
That said, to provide a price quote for a business valuation, we need to know more about what you need it for, how quickly you need it, and the quality of information that you have available. We can sometimes estimate the cost during an introductory call. However, we may need to review a few of your organizational documents and financial statements first.
To help you better understand the process, I’ve put together a few responses to frequently asked questions. The cost of a valuation hinges on a few key factors:
What Determines the Price of a Business Valuation?
- Purpose of the valuation.
- Type of report needed.
- Availability and quality of financial information.
- How quickly the report is needed.
Top Reasons for Needing a Business Valuation
We typically receive requests for valuations needed for estate or gift taxes, divorce settlements, shareholder disputes, buy-sell agreements, purchase price allocations, impairment testing, and eminent domain proceedings, but you may need a valuation for any number of other things. Knowing the purpose allows us to suggest what level of detail needs to be included and what type of report we should issue.
What Information Do I Need to Provide?
The quality of information available can both determine the time it takes to complete the valuation as well as have an impact the results. If organized and well-vetted financials are available, we may be able to spend less time setting up models and have less of a need for follow-up questions.
How Long Does a Valuation Take to Complete?
Typically, a valuation engagement can take between 3 and 5 weeks. In some cases, we can furnish a valuation faster but it requires rearranging current priorities and puts an increased demand on our staff.
Are There Lower Cost Alternatives?
The short answer is, yes. If you are only looking for a value and do not need to understand the methodologies, processes undertaken, and the support for the underlying assumptions, this can save time and money, but will not qualify for anything beyond use for your own informational purposes. If you are submitting a value to the IRS or a third party, you will likely need a valuation report supporting the assumptions and methodologies applied in the valuation.
How Do I Get Started?
Contact me. My role is to help you find the right solution and develop a plan that achieves those goals. As tempting as it is to lump all valuations into the same category and cost, the truth is there are many options available to you – and a good professional certified in business valuation can explain those options.