In today’s competitive marketplace, understanding your business’s true value is crucial. But do you really need an expert for a business appraisal? Here’s what you need to know.
Understanding Your Business Value
For small companies and simple service businesses with few assets, an accountant’s assessment might suffice. However, setting the right asking price when selling can be a game changer.
The Risks of Overpricing
Overpricing your company can lead to major frustrations. You want the best value for your business without scaring away potential buyers. Therefore, many business owners opt for expert appraisal services.
Benefits of a Professional Appraisal
- Confidence in Pricing: An expert appraisal ensures you don’t undervalue or overprice your business.
- Negotiation Power: A written appraisal can justify your asking price, strengthening your negotiation stance with buyers.
Cost Implications
Professional appraisers charge varying rates. For a simple oral appraisal, you might spend around $500. However, a comprehensive written assessment can cost between $2,500 and $5,000, depending on your business’s complexity.
Selecting the Right Appraiser
Not all appraisers are equal. Look for the following professional designations:
- C.B.A. – Certified Business Appraiser (Institute Of Business Appraisers)
- ASA – Accredited Senior Appraiser (American Society Of Appraisers)
- CVA – Certified Valuation Analyst (National Association of Certified Valuation Analysts)
These aren’t mandatory by law, but experienced full-time appraisers often possess one or more of these designations.
Tips for Choosing an Appraiser
- Interview Multiple Candidates: For written appraisals, consider interviewing several appraisers. Compare their credentials, cost, and references.
- Phone Interviews for Oral Appraisals: With lower fees for oral appraisals, most experts won’t prefer long selection processes. Decide based on phone interviews.
- Appraisal Agreement: Once you’ve selected your appraiser, ensure they draft an Appraisal Agreement detailing fees, report coverage, and completion time.
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