Summary
Business Appraisal FL|GA has designed this decision tree to help you get the most value for your time and investment and to understand business appraisal pricing and what a business valuation costs. We want you to see the fair market value of your business when it is time to value a business.
How Much Should I Spend on a Business Appraisal?
How Much Does Business Valuation Services or a Business Appraisal Cost?
What Should I Pay for a Business Valuation?
How much does a business valuation or appraisal cost?
Pricing to value a company varies from $2,900 to $9,700 for most business owners. How do you decide on the appropriate valuation type and cost? Business Appraisal FL|GA|HI has created this decision tree to help you maximize value and understand business appraisal pricing and the fair market value of your company. Learn more.
Please read what is a business valuation to learn more about our business valuation services and what a business owner receives from a certified business appraiser.
How Much Do Business Valuations Professional Charge?
Question #1: Is it for the Courts or the IRS?
Do you need a business valuation for IRS purposes? The IRS and courts have a certain minimum standard for valuing a company. These certified valuation reports are typically 60-100 pages long and value your business using at least 4-7 different valuation methods, including the asset approach, market approach, and income approach. The certified valuation expert signing the valuation would be comfortable testifying in court, presenting their finished product and all work notes created during the valuation engagement.
You can also read IRS business valuation guidelines written by our business valuation professionals and staff business appraisers or CVA.
If the valuation is for shareholder disputes, litigation, or a divorce, you need a certified business valuation report that meets the court’s standards. You will also need a personal goodwill allocation if your state allows it under your state’s marital asset laws. You may also need a more robust valuation if your business has intellectual property or other intangible assets on the balance sheet.
If you are going through a stressful divorce and own a small business, we can help with our divorce business valuation services, working with your certified public accountant (CPA).
Business Valuation Cost $3,900-$11,000 plus court time (if needed)
Question #2: Is it for a bank to make a loan?
SBA lenders have minimum standards they ask for from approved valuation firms. These reports can be from 40-60 pages long and signed by a CVA or similarly credentialed valuation professional. The valuation firm has some liability if the loan goes bad and their valuation services are questioned. Tax returns and solid financial statements are critical to show enough cash flow to cover loan payments. Depending on the size of your bank loan, more sophisticated valuation analyses and financial reporting may be needed.
BA FL|GA|HI is an approved SBA business appraiser firm with years of experience in small business lending business appraisals.
We have an article on business valuation reality check that shows how a loan will cash flow based on the final business appraisal numbers. You can also read our article about business valuations for SBA loans and request a sample SBA valuation.
Business Valuation Cost $2,700-$5,700
Question #3: Are you selling your business to a family member?
I bought a new Lexus for $100,000 and will sell it to you for $1. I am a nice guy. You buy a Lexus for $100,000 and sell it to one of your children for $1. The IRS wants to be paid on the $99,999 gift tax.
Moreover, if the transaction is not arms-length, you will need a certified valuation and a goodwill allocation just in case the IRS investigates your family transaction after the fact. This also holds if you are transferring your shares into a trust for the benefit of your family for tax compliance.
You can also read about the steps to perform a business valuation if you need an appraisal of your family business when making exit planning decisions.
Please read why you should get a business valuation of your family business.
Business Valuation Cost $4,900-$10,900
Question #4: Are you selling the business to your employees?
If you are a large enough business, you can use an ESOP to sell to your employees. If you have less than $20,000,000 in sales, you can have your company valued, arrange pre-financing for your management team, and consummate the sale. Our sister company, Bankers Advocate, can help you with either a family transfer/sale or a sale to your key employees.
If you are part of a holding company, you will want a more detailed company valuation product based on your audited financial statements.
Business Valuation Cost $4,900-$11,000
Question #5: I am buying a business
The size of the target company and whether you are using SBA or bank financing will determine the complexity of the required business valuation report. Larger businesses with complicated financing and deal structures need a more robust valuation done with fraud and other due diligence. A small business valuation will need less data, but the financial information might be incomplete. Here is a Due Diligence checklist our sister company, Bankers Factoring, uses.
Business brokers often contact us for their buy-side business valuation needs when looking for a reasonable price tag.
Business Valuation Cost $3,100-$8,700
Question #6: I want to know the ballpark value of my company every few years
Suppose you are a small business owner or do not plan to exit business ownership for a few years. In that case, you may be interested in knowing the estimated market value of your business for retirement planning or a future sale. While a business broker can provide a free estimate of your business’s selling price, it’s important to consider that you may get what you pay.
You also may want to issue key employees’ phantom stock or have a buy-sell agreement that has not been triggered, but you still need to know the company’s worth and the potential to sell your business.
For more information on valuating a small business, refer to the different methods business appraisers use here.
Business Valuation Services Cost $2,600-$4,100
Question #7: I received an unsolicited offer for my business.
If it is a serious buyer offer, you can have a medium-priced certified valuation made pre-business sale. However, be careful. You are only talking to one buyer, so they are driving the transaction. Always require an NDA and proof of financing from the investment bankers. Once these are provided, you can invest in a certified valuation, which includes a market approach, business comparisons, and cash flow analysis.
Business Valuation Cost: $3,700-$6,700
Question #8: I have a great idea and want to use a hypothetical valuation to approach investors.
A hypothetical valuation is performed to show an angel investor or family member how you expect your business to grow with their investment. The investment can be in equity, financing, or both. We have a detailed article on valuing pre-revenue start-ups.
Valuation results depend on your growth projections and our research on similar companies with comparable growth. We will also consider your intellectual property and the complexity of your capital structure.
Business Valuation Cost: $4,700-$8,900 (Hypothetical Valuation)
There are many reasons to have your business valued. This covers most of what we have seen in the last 20 years. Whether you need a business appraisal for IRS purposes, selling your company, or other reasons, gather your financial statements and other valuation data. Business Appraisal FL|GA|HI can have a zero-commitment discussion about your situation and appraisal cost.
And the free valuations from a business broker? You get what you pay for, and they are good for cocktail party conversations at best.
Questions about business valuation cost
We hope we have answered your questions about the cost of a business valuation. Business owners need to know their company’s fair market valuations quickly and cost-effectively from a certified valuation analyst.
No matter your starting point for a business appraisal, we stand ready to help anywhere in the United States with our accredited senior appraiser or CVA to help you understand the value of your business.
Why Business Appraisal FL|GA|HI
BA FL|GA| HI’s team members are certified business appraisers or valuation analysts (CVA). We provide reliable and credible business valuations that can be used in any setting. This article aims to help you better understand the cost of a business valuation based on your specific requirements, the valuation fee, the valuation process, and your company’s fair market value.
Please call us to discuss your unique situation, cash flows, and profits, and get a sample business appraisal from a certified business appraiser. We have a business valuation report product for small business owners that meets your business valuation standards and costs. You can cost-effectively know your business value.
Valuing a business is not difficult if the proper steps are taken by a valuation firm with expertise in your industry.