This week’s question for our “Ask Us Anything” series is one we get asked all the time.
"Who do you hire to do a business valuation?"
A Chartered Business Valuator, in most cases. The CBV designation is administered by the Canadian Institute of Chartered Business Valuators, and BDC recommends engaging one specifically because it helps both sides “avoid disagreements about the valuation or the risk of duelling valuations.”
We do not perform valuations ourselves, so this is a referral question rather than a pitch. What we see is what happens to a deal afterwards when the valuation was scoped badly, which is why the answer below is more about the engagement than the person.
Three other people get asked to do this and are usually the wrong choice for a transaction. Your own accountant knows your business but may not hold the designation, and a valuation prepared by someone without it carries less weight if the number is ever challenged. A business broker will give you an opinion of value as part of trying to sell you something, which is not the same exercise and not independent. An online calculator applies an industry multiple to a number you typed in, which is a starting point for curiosity and nothing more.
The part that matters more than who you hire is what you ask them for. A high-level calculation and a comprehensive report are different products at different prices, and a lender or a court will not treat them the same way. Settle the level of report, the as-at date, the standard of value, and who is permitted to rely on the report — that last one especially, because if your lender needs to rely on it they usually have to be named, and retrofitting that afterwards means paying for a reissue.
Proximity matters far less than buyers expect. A valuator two provinces away who knows your industry will produce a better report than a local one who does not, and almost none of the work requires anyone to be in the room.
Our post on commissioning a business valuation sets out the six things to specify in writing before the engagement letter is signed.
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.
