How do I choose a business valuation firm?

Hiring a valuation firm is a purchase like any other: define what you need, compare a few candidates against the same questions, and put the terms in writing. The right firm for a corporate dispute may not be the right firm for a small owner-operated shop. Start by deciding why you want the opinion, because that drives almost everything else.

Experience that matches your business

Ask how many engagements the firm has done for businesses like yours, and in your sector. A small business has different risks from a large one, such as owner dependence and thin records, and a firm used to large clients may not be set up for them. Ask for credentials too, and see what credentials a valuator should have.

Independence and who does the work

Ask whether the firm has any interest in the outcome, such as a fee that depends on the result or a relationship with the other side. Ask who will actually prepare the analysis, who will review it, and who will answer your questions.

Report level, scope and timing

Valuators offer different levels of report, from a short estimate to a full opinion that can stand up to challenge. A lender, a court or a partner may expect a particular level, so ask the other party first. The engagement letter should state the purpose, the date of the valuation, the documents you must supply, and the delivery date.

How fees work

Ask whether the fee is fixed or hourly, what could add to it, and what happens if the scope grows. Compare proposals on the same scope, not on price alone. Also ask what support is included if a buyer, lender or the tax authority later questions the report.