In business, cost-conscious decisions often make good sense. However, that is not the case when it comes to valuing your company. While it may be tempting to take the cheapest appraisal option, cutting corners in this area can lead to costly mistakes. A certified business valuation is more than just a quick back of the napkin calculation, it is a detailed, defensible report that can impact key financial and legal outcomes.
Business valuations are primarily used in critical situations such as partner buyouts, divorce settlements, estate planning, mergers, acquisitions, and litigation support. Opting for a cheap, unaccredited valuation will likely result in an analysis that is not well-researched and overly generic, leading to inaccuracies that can distort the company's true value. This can result in unfair settlements, poor financial planning, or deals that fall apart in high-stakes situations.
Certified business appraisers follow professional standards such as those set by the ASA, NACVA, and USPAP. These standards ensure thoroughness, consistency, and credibility. Discount valuation services may skip vital steps, use generic software tools, or be performed by individuals without these credentials, putting the reliability of the report in jeopardy.
No two businesses are exactly alike. Industry, market trends, customer concentration, and operational risks all play into a business's value. Low-cost valuations often use boilerplate models with little regard for your company's unique attributes. You end up with a valuation that does not consider many of the specific factors that will impact the value of your operation.
An appraisal that cannot stand up to scrutiny is virtually worthless. If your valuation is ever challenged for tax reasons (the IRS), sale purposes (potential buyers), or in court (judges, arbiters, and jurors), you will need an experienced professional appraiser who can explain and defend their findings. Low-budget services will not provide that kind of post-report support.
What looks like a good deal today can create headaches and expenses tomorrow. If a valuation needs to be redone due to its inaccuracy, you will end up paying twice. Worse yet, poor decisions made on the basis of a weak valuation can carry long-term financial consequences.
In summary, a quality business valuation is an investment, not just a line-item expense. It requires experience, research, and professional integrity. While it may cost more upfront, a thorough, defensible appraisal will provide peace of mind, strategic insight, and long-term value. When it comes to understanding what your business is truly worth, cheap is not the way to go.