4 Things to Look for When Hiring a Business Valuation Professional
Business valuation is one of the most important financial decisions you can make for your business. Choosing an expert to work with should not be an impulsive decision. It is absolutely necessary to interview prospective business valuation experts to guarantee a high-quality, knowledgeable professional will handle your unique situation.
There are a few factors you should consider before committing to work with a business valuation professional.
- Not All Business Valuation Professionals Are Created Equal
The field of business valuation has grown substantially in the last decade. Unfortunately, with that growth have come several inadequate training programs, generic software systems, and mediocre appraisers. There are some valuation professionals who will tell you exactly what you want to hear to gain your business, without offering in-depth, comprehensive service.
- Cost of Services
Costs associated with a business valuation can vary significantly. During the initial consultation, ask for an estimate of costs for your specific project. Receiving a verbal appraisal is more cost-effective than a written report. A written proposal will be much more expensive, but sometimes is the type of report a client will require. If a client is receiving an appraisal as part of litigation, costs climb even more. It is important to understand what type of appraisal you need and what type of appraisal you are willing to pay for.
Discuss costs upfront with the appraiser and be sure you are on the same page as to what the end product will be. Make sure the appraiser knows exactly what type of appraisal you need and be aware of low-cost appraisals, which can signify professional inexperience.
- Professional Designation
Business appraisers come from a variety of backgrounds and possess different experience. To verify the professional has adequate education in the field, ask for their credentials. There are five accreditation program designations that are considered top-notch:
- ASA (Accredited Senior Appraiser)
- ABV (Accredited in Business Valuation)
- CVA (Certified Valuation Analyst)
- AVA (Accredited Valuation Analyst)
- CBA (Certified Business Appraiser)
If the professional does not have one of these professional designations, they should not be entrusted with your business.
- Ask When You Will Receive Your Appraisal
This is a question to weed out other potentially inadequate appraisers. Ask how long the appraiser will expect the process to take and the steps involved. They should not offer an estimate until they have visited the site, performed personal interviews, and performed a hands-on inspection of company records.
If they offer a quick quote created from their “professional opinion” or generic software, cross them off your list of potential appraisers. It is better to hire someone who is willing to take the time to do things properly, rather than hire someone who may be unqualified or underprepared.
If you are actively searching for a business valuation expert, feel free to reach out to me at 419.794.2000 for a consultation.
Jeff Denning, CPA, ABV, CFF contributed this blog. Jeff has over 20 years’ experience in the field. He is ABV certified, and has heavy experience in litigation. Jeff’s multi-industry experience will guarantee that you receive the best business valuation service, regardless of business type.
Learn more about Jeff’s expertise in business valuation and forensic accounting, and get a better understanding of the process of business valuation in this video explainer from Jeff. You can also sign up for Gilmore Jasion Mahler’s free quarterly newsletter The Expert with a focus on business valuation and litigation support. Just click here for quick and easy sign up.
Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting services and provides comprehensive services including assurance, business advisory, tax, risk advisory and healthcare management. The Firm's professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.
