This week’s question for our “Ask Us Anything” series is one we get asked all the time.
"How much does it cost to do a business valuation?"
We do not perform valuations, so we are not going to quote you a number and any figure you see online should be treated the same way. What we can tell you is what drives the price, because the range is wide and almost all of the variation comes from decisions you make before the work starts.
The level of report is the single biggest driver. A high-level calculation and a comprehensive report are different products, not the same product done faster or slower. The comprehensive version involves independent verification of the underlying data and a level of documented reasoning the lighter version does not attempt. Ask a valuator to price both, and the gap between the two quotes will tell you more about your options than any published range.
Three other things move the number:
- How clean the records are. A business with accountant-prepared statements going back five years costs less to value than one where the numbers have to be reconstructed. You are paying for hours, and disorganised records consume them.
- How complex the business is. Multiple locations, several revenue lines, inventory, related-party transactions and intangible assets each add work.
- What the report has to withstand. A valuation prepared for your own decision-making is a different engagement from one a lender will rely on, and different again from one built to survive challenge in a dispute. Each step up costs more because each raises the standard of documentation.
The practical way to find out is to ask two or three Chartered Business Valuators for a quote on the same defined scope — same level of report, same as-at date, same list of who may rely on it. Quotes that look wildly different usually turn out to be pricing different products, and specifying the scope yourself is what makes them comparable.
One thing worth weighing against the cost. The valuation sets your offer, shapes what a lender will advance, and reappears inside the purchase agreement’s adjustment mechanics. A cheaper report that does not support any of those is not a saving.
Our post on commissioning a business valuation sets out what to specify before you sign the engagement letter, and who to hire covers the designation to look for.
This answer is general legal information, not legal advice, and it cannot account for the facts of your situation. Always speak with a lawyer before you act on it.
P.S. If a question like this one has come up in your own business, schedule a complimentary discovery call with our firm and we will walk through it with you.
