2 quotes for a business valuation can differ by a factor of five and both be honest. The variable is almost never the arithmetic. It is how much financial work has to happen before the arithmetic is possible, and whether the number needs a credential attached to it.
The market range
Commercial valuations for a private company generally run $1,500 to well over $10,000. Business brokers sit at the low end and often bundle it into a sale mandate. Specialist valuation firms and certified appraisers sit above the range, and reasonably so.
Ours start at $2,500 with a written report in 10 business days, on 3 cross-checked methods.
| Price | Typically | Suitable for |
|---|---|---|
| Under $1,500 | A multiple applied to reported EBITDA | An indication, not a position |
| $2,500 to $5,000 | 3 methods cross-checked, assumptions disclosed, written report | Negotiation, a raise, a partner buyout by agreement |
| $5,000 to $10,000+ | The above with multi-entity structure, complex revenue, or a contested position | A live transaction with an adversarial counterparty |
| Certified appraisal | An opinion under a defined standard, signed by a credentialed appraiser | Tax, court, regulatory filing |
What drives the fee
- Whether the earnings are already normalised. A multiple applied to unadjusted reported profit is not a valuation. If normalisation has not been done, it has to be, and that is the bulk of the work.
- How many comparables genuinely exist. Some sectors have deep transaction data. Others have 4 deals in 5 years and each needs arguing individually.
- Forecast reliability. A discounted cash flow is only as good as the model underneath it. If there is no driver-based model, one has to be built or the DCF has to be dropped.
- Who will challenge it. A number for internal planning and a number that a counterparty’s advisor will attack are the same analysis with different amounts of documentation behind each assumption.
A valuation applied to earnings nobody has normalised is a precise answer to the wrong question.
What is in the report
3 methods, cross-checked, with the divergence between them treated as information rather than averaged away.
- Discounted cash flow. Highly sensitive to 2 inputs, so both are stress-tested and shown rather than buried in a cell.
- Market multiples. Comparable public companies, with the comparability argued rather than asserted.
- Precedent transactions. Actual deals in the sector, adjusted for what made them different.
Where the three agree you have a strong position. Where they disagree you have something more useful: advance notice of the argument the other side is going to make.
When you need the more expensive product
We are not certified appraisers. If the number has to satisfy a tax authority, a court or a regulator, you need a licensed appraiser and the credential is what you are buying. We say this on the first call rather than the third, and we do not quote for work you should not buy from us.
409A valuations for US option pricing are also a separate exercise with their own safe-harbour requirements and their own specialist providers. Valuing a business commercially and pricing common stock for option grants are different questions with different answers.
What to ask before commissioning one
- Are you valuing reported earnings or normalised earnings, and who does the normalisation?
- How many methods, and what happens if they disagree?
- Who has to accept this number, and is your signature sufficient for them?
- What is excluded, and what does the first excluded item cost?
Before you spend anything
Write down your last 12 months of EBITDA and list every cost inside it that a new owner would not incur. If that list changes the number by more than ten percent, do the normalisation before you commission the valuation. It will cost less and the answer will be worth more.