In a perfect world, the advice and opinions that professionals provide you and your business regarding expected events would always occur exactly how they thought they would. In reality, the number of variables that can potentially impact the results of any transaction, from a personal or business perspective, are many, and the best anyone can do is reasonably understand them and estimate how they will impact the situation.
In the valuation world, appraisers are asked to opine on value based on the variables pertinent to the overall transaction in consideration. The end result is a well-thought-out estimate of value considering the market information they research and the internal data they are provided with to analyze.
From an owner, investor, or seller’s perspective, the conclusions can be reasonably relied upon; however, they are not guaranteed. An appraisal should not be considered absolute but can be used as a basis for negotiations between concerned parties, whatever their interests.
From a purchase or sale perspective, in an open market, there are many variables at play when trying to trade these assets. The final sale price should be within a reasonable range of where the appraised values were estimated. There may, however, be unforeseen factors that influence the transaction that an appraiser cannot foresee occurring, and that are inconsistent with the assumptions made.
Appraisals can also be used as guidelines in settling disputes when there is no agreed-upon or negotiated value associated with situations like a divorce or partner buyout. Differences of opinion are commonplace when it comes to valuing assets, whether that be with machinery & equipment, personal property, real estate, intangible goodwill, or the overall worth of a small business. Experienced appraisers who are accredited or certified in their specific field can greatly assist in facilitating a successful outcome where these differing opinions exist.
One of the primary reasons for hiring appraisers is to create an independent unbiased opinion that is well-researched so the parties directly involved and those ultimately making decisions in the matter can have an impartial perspective to assist in rendering their own decisions.
Like most things in life, nothing is guaranteed; however, having reliable and supportable opinions can go a long way to realizing a favorable outcome.