Merrimack Business Appraisers

Frequently Asked

What industries have you prepared business valuations for?

  • SIC 13 Oil and Gas Extraction
  • SIC 15 Building Construction – General Contractors and Operative Builders
  • SIC 16 Heavy Construction Contractors
  • SIC 17 Construction – Special Trade Contractors
  • SIC 20 Food and Kindred Products Manufacturing
  • SIC 22 Textile Mill Products Manufacturing
  • SIC 24 Lumber and Wood Products Manufacturing
  • SIC 27 Printing, Publishing, and Allied Products
  • SIC 30 Rubber and Miscellaneous Plastic Products Manufacturing
  • SIC 32 Stone, Clay, Glass, and Concrete Products Manufacturing
  • SIC 33 Primary Metal Industries
  • SIC 34 Fabricated Metal Products
  • SIC 35 Industrial and Commercial Machinery and Computer Equipment
  • SIC 36 Electronic, Electrical Equipment and Components Manufacturing
  • SIC 38 Measuring, Analytical and Control Instruments; Photographic, Medical, and Optical Goods; and Watches and Clocks Manufacturing
  • SIC 39 Miscellaneous Manufacturing Industries
  • SIC 41 Local, Suburban Transit and Interurban Highway Passenger Transport
  • SIC 42 Motor Freight Transportation and Storage
  • SIC 48 Communications
  • SIC 50 Wholesale Trade – Durable Goods
  • SIC 51 Wholesale Trade Nondurable Goods
  • SIC 52 Building Materials, Hardware, Garden Supply, and Mobile Home Dealers
  • SIC 54 Food Stores
  • SIC 55 Automotive Dealers and Gasoline Service Stations
  • SIC 56 Apparel and Accessory Stores
  • SIC 57 Home Furniture, Furnishings, and Equipment Stores
  • SIC 58 Eating and Drinking Places
  • SIC 59 Miscellaneous Retail (Liquor Stores, Pharmacies, Sporting Goods, Gifts, Home Heating Oil, Swimming Pools, Internet Resellers, etc.)
  • SIC 61 Nondepository Credit Institutions
  • SIC 62 Security and Commodity Brokers, Dealers, Exchanges, and Services
  • SIC 64 Insurance Agents, Brokers, and Services
  • SIC 65 Real Estate (Development, Management, Operation, Agents and Brokers, etc.)
  • SIC 67 Holding and Other Investment Offices
  • SIC 70 Hotels, Rooming Houses, Camps, and Other Lodging Places
  • SIC 72 Personal Services (Photographic Studios, Hair Salons, Funeral Services and Homes, Debt Reduction Services, Parking Lots, etc.)
  • SIC 73 Business Services (Advertising Services, Staffing Services, Entertainment Equipment and Computer Programming, Hardware, and Networking Services, Alarm System Monitoring, etc.)
  • SIC 75 Automotive Repair, Services, and Parking
  • SIC 78 Motion Pictures
  • SIC 79 Amusement and Recreation Services
  • SIC 80 Health Services (Offices of Physicians, Dentists, Physical Therapists, Ambulatory Surgery Centers, etc.)
  • SIC 81 Legal Services
  • SIC 82 Educational Services
  • SIC 83 Social Services
  • SIC 87 Engineering, Accounting, Research, Management, and Related Services
  • SIC 89 Services, Not Elsewhere Classified

Who governs business valuations as it seems the AICPA gives credibility to a calculation of value report?

The American Institute of Certified Public Accountants (AICPA) is the national professional association of CPAs in America. The highest governing body of the business valuations industry in the United States is the USPAP, Uniform Standards of Professional Appraisal Practice. USPAP is promulgated by the Appraisal Foundation that is authorized by Congress as the source of appraiser qualifications and appraisal standards in the United States. Such standards include for development and reporting of business appraisals.

Calculation of value reports are acknowledged by the AICPA, but do not meet the standards of USPAP that governs the requirements to meet business appraisal standards.

Why are calculation reports or calculations of business value becoming more prevalent?

There is value in a business owner getting a sense of the value of their business. Other professionals offer calculation reports to help fill this need. Unfortunately, it is confusing as the intent of the reports are often misconstrued and the paying client is led to believe this limited report will replace the need for a business valuation that is detailed, thorough, and presents both how and why the objective valuation amount was determined. Do your homework to understand what you need and for what objective; a common issue with calculation reports is that the report is incorrect, sets unrealistic expectations, and can lead to higher costs and litigation to correct the problems they create. The terminology is confusing at best and the consequences of misunderstanding include lost time, money, and frustration.

Can I get away with paying for a calculation report instead of paying the higher fee for a business appraisal?

Generally, a calculation report is a rough idea of the value of your business. It may be useful for planning purposes or to get a general sense of value. It is important to understand that the cost is less because the work product is significantly less and limited. These reports lack supporting data and analysis and are supposed to include a disclaimer that the report does not result in an opinion of value. It does not meet the standards in the business valuation industry where an appraisal needs to stand up to scrutiny including, but not limited to, settling a divorce, shareholder dispute, or settling an estate. It is important to understand what you need a valuation for which will determine the level of report or valuation that will meet your needs.

Is a calculation of business value the same as a business appraisal?

No. A calculation of business value (also described as a calculation assignment or calculation report) is not a business appraisal. It does not follow the rigorous and detailed approach to document and explain how and why a valuation was determined in order to stand up to scrutiny, and is supposed to include a disclaimer in the report that the calculation is NOT an opinion of value.

What is a Calculation Assignment or Calculation Report?

A calculation assignment or calculation report is a report where the two parties – the client and the valuer – agree on the approach for determining the value of the client’s business. The intent is to provide an idea of the value of a business. It is a lower cost report that is supposed to include a disclaimer that the report is NOT a recognized opinion of business value. It lacks supporting information and analysis, so while of use for planning, such a report is inadequate for business valuations that need to stand up to scrutiny including for settlement of a divorce or shareholder dispute. It is unlikely the IRS will rely on such a limited report to adequately support how the valuation of a business was calculated and the tax implications.

Is geography an important factor when selecting a business valuation professional?

No. Neither the geographic location of your business nor the geographic location of the business valuation professional matter. As a certified business appraiser, I have prepared business valuations for privately held businesses throughout the United States; from Maine to Hawaii and North Dakota to Texas. Internationally, I have developed business valuations for businesses in more than fifteen different countries.

Through decades of experience and by leveraging technology, business valuations can be thoroughly and completely prepared remotely. During the pandemic, site visits were not possible as some businesses were shut down or access was limited for the safety of the employees. In such cases and for businesses not located nearby, I have successfully completed ‘site visits’, including for a scuba diving business in Hawaii, gathering the important data needed to finalize the business valuation. 

Instead of limiting your search to a professional who is nearby or who has completed valuations in your industry, focus your search on a business valuation professional who has the following:

  • Credentials. Are they certified?  Do they have the credentials to demonstrate their understanding of business valuation? One way to assess this could be asking the professional if this is their full-time focus. That can be an indicator that the professional has dedicated his or her career to remaining current on tax laws and business valuations are their sole focus. Ask the professional for their credentials specific to business valuation, looking for CBA, ASA and CVA. Note: CPA is not sufficient.
  • Track record. Does the business valuation professional have a proven track record demonstrating their business valuations stand up to rigorous scrutiny? They should be able to clearly speak to the track record of testifying in court as one example and what the results were.
  • Proven process. Does the business valuation professional offer a proven process and methodology that is consistently applied regardless of the business or industry? Process is important as it is the process that converts to the final deliverable. When an ‘industry professional’ presents to the trier of fact a one page business valuation report and the trier of fact compares that to our 100+ page business valuation report documenting what was done, why it was done, how it was done, conclusions drawn and why those conclusions are reasonable and credible, there is no comparison.

Do you offer an initial free consultation?

Yes, we do offer a complimentary, no-obligation consultation to discuss what you have in mind, the reason or purpose of the appraisal, and your desired timing. It is important for us to understand your goals so that we can provide appropriate advice as to the nature and scope of the appraisal involved. Sometimes we find that a complete valuation is not even necessary. This free consultation enables everyone to be on the same page about how best to proceed.

We have also found that the sooner you come to us, the better. Even if you are early in the process, it is never too soon to initiate a conversation about how our work can fit into your goals. All information will remain confidential.

To find a mutually-convenient time for a conversation, please contact us at or 978-975-7600.

When should I hire someone for a business appraisal?

As soon as you think you might need a business valuation that is the time to contact us. We offer a free initial consultation to discuss your needs. By having an initial conversation early on, we can plan accordingly, reserve time, and ensure that a quality valuation can be produced for you in your desired timeframe.

To find a mutually-convenient time for a conversation, please contact us at or 978-975-7600.

Do you specialize in my business sector?

We have completed hundreds of valuations for clients across the country and the globe. A nationally-recognized valuation firm, our work has proven highly defensible for small and mid-sized privately held companies, including closely held family businesses, across dozens and dozens of industries and sectors.

We have prepared business valuations in nearly every sector including retail, food service, wholesale, manufacturing, technical services, professional practices, and healthcare.  We even do real estate holding companies.

Yet more importantly, experience has confirmed that industry specialization does not translate into better results despite what some claim. In fact, on several occasions our work has often prevailed over the opposing so-called industry specialists.

What is more important than experience in the specific industry is the process, including a careful and thorough qualitative and quantitative analysis of the company and the environment in which it operates.  The Appraiser considers the history, products, markets, customers, management and employees, facilities, capital structure, competitors, industry, economy, financial performance, and future earning capacity.

Lou Pereira is a full-time business appraiser. As he is an expert who has achieved the profession’s highest levels of training and certification, you can count on his business valuations to stand up to rigorous scrutiny and challenge by opposing parties. His appraisals ultimately will save time, aggravation, and unnecessary additional professional fees (e.g., legal and accounting). The same cannot be said of many industry specialists.

What is a Small Business?

The Small Business Administration defines small by various standards; those standards permit businesses to have as many as 500 employees in some SIC codes and sales exceeding $28 million in other codes. The private investment market commonly describes businesses that sold for a price between $5 million and $50 million as middle market. This is to distinguish them from small businesses which are thought to have values below the $5 million value. Small business owners typically have a focus on doing those things within their business that bring them the greatest after tax benefit possible. There are prerogatives of control that cannot be realized in public companies or even in larger private companies that are unique to the small business.

What is the value of my business?

The value of a business may vary dependent on the purpose of the valuation. The business appraiser must understand the purpose for which the business appraisal is being performed. See the definition of Fair Market Value and question if it applies to the situation.

What is Fair Market Value?

The most common reference of the definition of Fair Market Value used in business valuation is found in Revenue Ruling 59-60. This ruling from 1959 provides the basic directions from the IRS as to the valuation of privately held companies and the oft quoted definition of Fair Market Value as, “the price at which the property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts. Court decisions frequently state in addition that the hypothetical buyer and seller are assumed to be able, as well as willing, to trade and to be well informed concerning the property and the market for such property.”

Why should I have my business appraised?

When value matters, you need a business appraisal by an independent expert, preferably a Certified Business Appraiser. There are many different reasons or purposes to value a business. In the end most of these boil down to taxes and dispute or disagreement with others over the value. There can be dire consequences to using the wrong value or using a value intended for one purpose when it was meant for another.

Why not use a Rule of Thumb or multiples of publicly traded companies?

Only if your company is very similar to the public companies you are analyzing, in terms of all of the different factors that affect the value of the public stock. The fact that your company is not public makes it different in one very important factor. Choosing the appropriate multiple requires an in-depth analysis of the company to properly understand how it correlates to the public market if at all.

What determines the cost of an appraisal? Is it like my house just $250?

Unfortunately, no! The scope of the work that you require, the purpose of the appraisal, and the complexity of your business are the three most important factors in determining cost of a business valuation. Our work may vary from several hours to more than 100 hours of time. Based on discussions with either you, or your advisor, accountant, or attorney, we can prepare either estimates of time or fixed prices to prepare the report you need.

I am thinking about selling either part of or my entire business. Do I need an appraisal?

Depending upon the size of the business, the need for an appraisal depends on the individual. If you want to use the appraisal report as an offering document to help justify how the value was determined, it may prove to be worthwhile. For most of our clients, we generally suggest a consulting arrangement based on agreed upon procedures which will be much more cost effective.

If I give my son or daughter stock in my company, do I need an appraisal?

We recommend that a business appraisal be performed whenever a potential gift tax is involved. If the Internal Revenue Service audits the gift, the burden of supporting the value of the property given is on the taxpayer. A well-documented business appraisal will establish the value of the gift and show the IRS that the valuation was properly performed. In fact, the IRS requires a “Qualified Appraisal” be performed by a “Qualified Appraiser” for many tax filing situations.

Can’t I have my company’s accountant or CPA appraise my business?

We have the utmost respect for the accounting profession. Unfortunately, very few accountants and CPAs have the necessary expertise and credentials to value a business. Ask your CPA if he or she is accredited in business valuation by the American Institute of Certified Public Accountants (only a very small percentage are accredited in business valuation – approximately less than 1%) or any other appraisal organization. When it comes to business valuation, you want a highly trained and certified expert – ideally with both the Certified Business Appraiser (CBA) and the Accredited Senior Appraiser (ASA) credentials – preparing a business valuation that will stand up to rigorous scrutiny.

Certified appraisals, prepared by certified/accredited appraisers in full compliance with the professional standards of the leading professional associations and USPAP, will stand up to challenge by opposing parties. Such an appraisal will save time, aggravation, and unnecessary additional professional fees (e.g., legal and accounting).

In today’s business environment there may also be some fundamental conflicts of interest for your CPA in providing business valuation services for clients for whom the CPA provides tax, audit, or other services. The potential conflict of interest could be an issue if the appraisal is contested. To avoid such conflict, seek a firm that specializes in business valuation services. As independent business appraisers, we work with our client’s accounting, financial, and legal advisors to gather the necessary information to perform an unbiased business valuation. We also depend upon their cooperation to complete our assignment.

What standards do you use for your business appraisals?

At Merrimack Business Appraisers, our business appraisals are USPAP compliant. The Uniform Standards of Professional Appraisal Practice (USPAP) are promulgated by the Appraisal Standards Board of the Appraisal Foundation, which is authorized by Congress as the Source of Appraisal Standards and Appraiser Qualifications. USPAP represents the generally accepted and recognized standards of appraisal practice in the United States.

Assessing credentials can be confusing. What are the most important credentials to look for in hiring a business appraisal expert?

There are four main organizations granting business valuation credentials. Each has different requirements.

  1. Institute of Business Appraisers (IBA) is the leading credentializing organization. The Certified Business Appraiser (CBA) designation is a rigorous certification process that is highly regarded. The training includes rigorous peer review and excellent report writing training.
  2. American Association of Appraisers – this organizations offers the designation of Accredited Senior Appraiser (ASA), a preeminent designation that includes 10,000 hours of business valuation and the only designation required to comply with USPAP. This organization is much larger and has more appraisers in its certification including real estate, business valuation, and gem stone appraisers
  3. National Association of Certified Valuators and Analysis (NACVA) offer the Certified Valuation Analysis designation. This certification is less rigid to achieve and does not have to be a CPA.
  4. American Institute of Certified Public Accountants (AICPA) offers a designation in Accredited in Business Valuation (ABV) that is one of the easiest designations to acquire. Less rigorous than the above top two.

Another important certifying organization is the International Business Brokers Association (IBBA). They offer the Certified Business Intermediary (CBI) designation, an important credential because many stakeholders (attorneys, accountants, judges, etc.) understand that the best judge of value is someone who is engaged in actually selling businesses on a regular basis.

Do you work with DLOM & DLOC?

Yes. A Discount for Lack of Marketability (DLOM) or a Discount [or Premium] for Lack of Control (DLOC) can be complex issues that are often difficult to understand for most individuals not trained in business valuation. The differences between minority and control values and marketable versus nonmarketable values are often subtle.

We keep abreast of the latest peer-reviewed methods regarding when and how a DLOM or a DLOC should be applied. And we fully explain the appropriate degree of adjustment when required.

Can I use a business appraisal for another purpose?

Business appraisals are done for specific purposes with specific assumptions. Using a business appraisal that was developed under the assumptions intended for one purpose would likely be misleading if used for another purpose. Don’t use a “restricted use” appraisal that was prepared to obtain a bank loan when you actually need a “formal” appraisal for your partnership dissolution proceedings.

What does the judge or ‘trier of fact’ assess when a business appraisal is challenged in court?

The Court takes the following under consideration:

  • The credentials of the appraiser.
  • The experience of the appraiser, i.e., does the business appraiser perform business valuations on a full-time basis?
  • The independence of the appraiser, i.e., is the appraiser an independent third party or an advocate?
  • The appraiser’s training, education, and membership in professional valuation organizations such as Certified Business Appraiser.

Tax court judges deal with business and financial issues on a regular basis. They are experienced and educated in finance, tax law, and asset valuation.

Family courts are more often engaged in resolving personal issues including custody of children. In most such cases, the main assets are the house and savings. It is less common for the divorce settlement to include the valuation of a business.