levitra"> levitra"> Q: How much does a business valuation cost? Is it worth spending a lot of money on this?

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Ask the Expert: Business Valuator

Because of the large volume of mail and the sensitivity or specific nature of some issues, it is impossible to post answers to all of your questions in this column. As time permits, and if you so indicate, I will try to send a few personalized responses. DivorceInteractive.com has a strict Privacy Policy and will not post your name or contact information or share such information with any other person or entity without your permission.

Q: How much does a business valuation cost? Is it worth spending a lot of money on this?

A: Business valuation fees range considerably and depend on many factors, not the least of which is what the appraiser is asked to value, the purpose of the appraisal, and the availability of requisite financial and tax information. Another important determinant is the amount of work required by the appraiser to comply with professional standards. Members of the American Society of Appraisers, including this author, are required to comply with the relevant parts of the Uniform Standards of Professional Appraisal Practice (USPAP). According to Steven F. Schroeder, USPAP compliance “has increased the amount of work appraisers must do, even for simple appraisal assignments” (“How Much Should a Business Appraisal Cost?” Inc. Magazine, July 2003).

While most people look at the explicit cost of an appraisal, few look at the cost of not getting a professional business valuation. Consider the following examples. Both spouses own the business and want to sell it and divide the proceeds. Without an appraisal, they may each fetch a lower amount than what they had hoped to realize. Alternatively, a competitor may pay more than fair market value to buy them out, giving rise to cash flow and/or tax issues, not otherwise present. Another possibility is that one spouse owns a business and wants to keep it. Without the valuation, the non-owning spouse may end up with a considerably smaller financial settlement. Moreover, appraisals can provide insight about ways to enhance the company’s value. This is important for the spousal owner who wants to keep running the business, improve profitability, and sell at a later time.

Disclaimer: Nothing in this article is intended to serve as investment or legal advice or to persuade, induce, or encourage the reader to take any action related indirectly or directly to information presented in this column. The reader is urged to seek his or her own investment and legal advice from qualified professionals. The authors (and their respective companies) disclaim any and all liability for any suits, actions, or proceedings arising out of or related to the text, substance, and/or subject matter of this article.

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