This is one of the most common questions asked during an initial conversation with a prospective client. Naturally, they want to make a wise decision in selecting a qualified business appraisal professional for preparing their business valuation.
For most people, assessing a business appraiser is not a common occurrence; you may need a business valuation once or twice in a lifetime. My clients are typically savvy business people; having built a business that represents a lot of hard work and sacrifice. It is understandable to assume that having developed a business appraisal for a business exactly like yours would be beneficial.
Recent Example:
Over the past year or so, a brew pub owner called me to assess if I was a good fit to develop a business valuation for his business. When he asked me ‘the question’ about my experience in having prepared a valuation for a brew pub, I explained that I had not, but highlighted the more important criterion to help him make his decision including my proven process, experience, and industry certifications. I had developed business valuations for hundreds of businesses and no two were exactly alike. He politely thanked me and did not hire me. Months later, owners of another brew pub restaurant contacted me and asked ‘the question’. I answered honestly and explained why that was not the best criteria to focus on when selecting a business appraiser. They hired me and you can read more about the results here.
Over my decades of experience, I have prepared business valuations for minerals in the ground, a scuba rental shop in Hawaii, and college courses. The diversity and uniqueness across industries and within industries is remarkable.
If you need a business valuation, for whatever reason (e.g., settlement of a divorce, shareholder dispute, tax reasons including 409A valuations and settlement of an estate), evaluate the prospective business valuation professional based on how they present their process: is it clear? logical? And ask them about their track record and ask about their professional certifications. Specifically, are they a certified business appraiser? Do they do this work full time or are they doing this on the side while their professional focus is elsewhere? Note, some accounting firms offer business valuations for a revenue stream outside of busy season.
I suggest you do not focus on industry and geography (location of the appraiser); these do not matter.
Review a summarized list of criterion to evaluate an appraiser.
Read another article on why industry does not matter, using franchises as an example.
When Values Matters.
