{"id":10389,"date":"2019-04-26T06:39:51","date_gmt":"2019-04-26T06:39:51","guid":{"rendered":"https:\/\/www.certitrek.com\/isba\/?p=10389"},"modified":"2021-06-24T15:15:35","modified_gmt":"2021-06-24T15:15:35","slug":"what-does-a-business-appraisal-cost","status":"publish","type":"post","link":"https:\/\/www.certitrek.com\/isba\/what-does-a-business-appraisal-cost\/","title":{"rendered":"What Does a Business Appraisal Cost?"},"content":{"rendered":"<div id=\"attachment_10390\" style=\"width: 798px\" class=\"wp-caption alignnone\"><img decoding=\"async\" aria-describedby=\"caption-attachment-10390\" class=\"lazyload size-full wp-image-10390\" src=\"https:\/\/www.certitrek.com\/isba\/wp-content\/uploads\/sites\/7\/2021\/02\/business-appraisal-cost.jpg\" data-orig-src=\"https:\/\/www.certitrek.com\/isba\/wp-content\/uploads\/sites\/7\/2021\/02\/business-appraisal-cost.jpg\" alt=\"\" width=\"788\" height=\"443\" srcset=\"data:image\/svg+xml,%3Csvg%20xmlns%3D%27http%3A%2F%2Fwww.w3.org%2F2000%2Fsvg%27%20width%3D%27788%27%20height%3D%27443%27%20viewBox%3D%270%200%20788%20443%27%3E%3Crect%20width%3D%27788%27%20height%3D%27443%27%20fill-opacity%3D%220%22%2F%3E%3C%2Fsvg%3E\" data-srcset=\"https:\/\/www.certitrek.com\/isba\/wp-content\/uploads\/sites\/7\/2021\/02\/business-appraisal-cost-200x112.jpg 200w, https:\/\/www.certitrek.com\/isba\/wp-content\/uploads\/sites\/7\/2021\/02\/business-appraisal-cost-300x169.jpg 300w, https:\/\/www.certitrek.com\/isba\/wp-content\/uploads\/sites\/7\/2021\/02\/business-appraisal-cost-400x225.jpg 400w, https:\/\/www.certitrek.com\/isba\/wp-content\/uploads\/sites\/7\/2021\/02\/business-appraisal-cost-500x281.jpg 500w, https:\/\/www.certitrek.com\/isba\/wp-content\/uploads\/sites\/7\/2021\/02\/business-appraisal-cost-600x337.jpg 600w, https:\/\/www.certitrek.com\/isba\/wp-content\/uploads\/sites\/7\/2021\/02\/business-appraisal-cost-700x394.jpg 700w, https:\/\/www.certitrek.com\/isba\/wp-content\/uploads\/sites\/7\/2021\/02\/business-appraisal-cost-768x432.jpg 768w, https:\/\/www.certitrek.com\/isba\/wp-content\/uploads\/sites\/7\/2021\/02\/business-appraisal-cost.jpg 788w\" data-sizes=\"auto\" data-orig-sizes=\"(max-width: 788px) 100vw, 788px\" \/><p id=\"caption-attachment-10390\" class=\"wp-caption-text\">The inscription VALUATION on the gear of the clock mechanism, 3d illustration<\/p><\/div>\n<p>This is one of the most popular questions I am asked, both by clients and business valuation students.\u00a0 The answer to this question invariably is the same as many other questions posed to me, \u201cit depends.\u201d<\/p>\n<p>I thought that I would expound on some of the factors that I consider when quoting a fee for a business valuation assignment.\u00a0 These are in no particular order<\/p>\n<p>What is the purpose of the valuation?<\/p>\n<p>An appraisal report prepared for a litigation or tax event will be written differently than if I were writing it for the owner of the business for internal planning purposes.<\/p>\n<p>USPAP allows for two types of written reports, the Appraisal Report, and the Restricted Appraisal Report.\u00a0 One takes longer to write, and I generally charge more for that one.\u00a0 There are certain purposes, where I tell the client I will only write an appraisal report.\u00a0 They don\u2019t get a choice unless they want to hire a different appraiser.<\/p>\n<ol>\n<li>Are the financial statements of good quality or will I be using tax returns or oftentimes even worse, QuickBooks reports from the in-house bookkeeper before the Company\u2019s accountant has made their adjustments?\n<ul>\n<li>Tax returns are prepared in order to calculate tax liability, not to showcase smooth operations. \u00a0Some of those expenses are buried in very interesting places in certain tax returns.<\/li>\n<li>The harder it is to figure out what the earnings of business have been, the harder it will be to determine what those future earnings will be.\u00a0 I once appraised a business where the financial documents I was able to analyze consisted of a checkbook register.\u00a0 That was a very interesting court case to testify in!<\/li>\n<\/ul>\n<\/li>\n<li>Oh yeah, court testimony will be extra and will be billed and collected prior to appearing in court.\n<ul>\n<li>Expert testimony fees tend to increase the overall cost of a business appraisal assignment.\u00a0 Not all clients know if their purpose will lead to court testimony, but I spell it out in my engagement agreements regardless, just in case.<\/li>\n<\/ul>\n<\/li>\n<li>How fast does the client need my report?\n<ul>\n<li>I have been asked to complete a business appraisal for a trial scheduled for the following Tuesday.\u00a0 The call happened on Thursday.\u00a0 In my experience, it takes the client at least a week to gather everything I need to see, and then I have to have time to examine it all and to draw my conclusions.\u00a0 My analysis often leads to follow-up questions that the client then takes time to answer.<\/li>\n<li>If I need to put other projects and my family and hobbies on hold in order to complete the project within a client\u2019s very quick timeline, that fee will likely be impacted.<\/li>\n<li>On the other hand, if the client has given me plenty of time to meet my other obligations, I will often charge less than I would for a normal engagement.<\/li>\n<\/ul>\n<\/li>\n<li>What is the current status of my workload?\n<ul>\n<li>If I have three valuation assignments I need to finish in the next couple of weeks on my desk right now, I am less likely to want to add the fourth report to my normal fee schedule.<\/li>\n<li>Of course, if I am playing Solitaire on the computer when the client calls because I am between assignments, then I will often quote a lower fee.<\/li>\n<\/ul>\n<\/li>\n<li>How does the client sound on the phone?\n<ul>\n<li>If I get the impression that the client will be difficult to work for, I will often charge a higher fee.\u00a0 Some examples of things I have had happen to me are as follow:\n<ol type=\"i\">\n<li>Dragging their feet with the requested information,<\/li>\n<li>Requesting multiple changes to the assignment, before I even have a chance to complete it,<\/li>\n<li>Changing my report\u2019s due date mid-assignment,<\/li>\n<li>Changing my report\u2019s effective date mid-assignment,<\/li>\n<li>Late to pay my retainer,\n<ol>\n<li>I now tell clients that I will not begin until after I have received the retainer.<\/li>\n<\/ol>\n<\/li>\n<li>Repeatedly asking if I can do the report for less than I quoted and then mentioning the reduced timeline at the end of the call, and<\/li>\n<li>The client tells me they will think about my quote and call me back later if they decide to use me.\n<ul>\n<li>Now I provide engagement agreements with an expiration date, so if I quote a project when I have lots of time, but I don\u2019t actually get engaged until three months later when I am up to my eyeballs in work, I am able to increase my fee.\u00a0I operate my appraisal practice out of my home, so I can get to work as early as I need and stay as late as I want to, and still be available for my family.\u00a0 This flexibility also leads to some interesting fee questions, such as clients wanting to meet with me after I complete the report to review it with them.\u00a0 I typically advise the client that I would be happy to meet with them, in their conference room, free of charge, but if I have to kick the wife and kids out of the house, I will have to charge them.\u00a0The process to obtain a professional designation in business valuation involves a fair amount of study as well as training one\u2019s mind to be able to think logically and to be able to communicate one\u2019s thought process to the end-user.\u00a0 This is a set of skills that are not necessarily intuitive, meaning that without correct education, it is easy to skip a few steps and arrive at unreasonable numbers in an analysis, but none of the above actually answers that first question I posed.\u00a0 I have seen websites where free valuations are offered.\u00a0 One simply inputs some data and outcomes an answer, just like a vending machine handing out free candy.\u00a0 On the other end of the spectrum, I have met appraisers who regularly charge $10,000 or more for their analysis.\u00a0 In my experience, most business appraisal projects\u2019 costs land within the range of $1,500 to $8,000 or so.\u00a0 However, as mentioned above, there are a variety of factors that can influence the price quoted.<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<p class=\"p1\"><span class=\"s1\"><b>Recommended Reading<\/b><\/span><\/p>\n<ul class=\"ul1\">\n<li><a href=\"https:\/\/learning.intlbca.com\/products\/what-does-a-business-appraisal-cost\">What Does a Business Appraisal Cost?<\/a><\/li>\n<li><a href=\"https:\/\/learning.intlbca.com\/products\/what-does-the-business-appraisal-process-look-like\">What Does the Business Appraisal Process Look Like?<\/a><\/li>\n<li><a href=\"https:\/\/learning.intlbca.com\/products\/valuing-a-small-business-in-its-startup-phase\">Valuing a Small Business in Its Startup Phase<\/a><\/li>\n<\/ul>\n<p class=\"p1\"><span class=\"s1\"><b>Recommended Resources<\/b><\/span><\/p>\n<ul class=\"ul1\">\n<li><a href=\"https:\/\/learning.intlbca.com\/products\/valuation-practice-advice-turn-the-practice-you-have-into-the-practice-you-want\">Valuation Practice Advice: Turn the Practice You Have Into the Practice You Want!<\/a><\/li>\n<li><a href=\"https:\/\/learning.intlbca.com\/products\/business-valuation-for-marital-dissolution\">Business Valuation for Marital Dissolution<\/a><\/li>\n<li><a href=\"https:\/\/learning.intlbca.com\/products\/providing-support-for-the-selected-dloc-and-dlom\">Providing Support for the Selected DLOC and DLOM<\/a><\/li>\n<\/ul>\n<p class=\"p5\"><span class=\"s1\"><b>Recommended Courses<\/b><\/span><\/p>\n<ul class=\"ul1\">\n<li class=\"li6\"><span class=\"s2\"><a href=\"https:\/\/learning.intlbca.com\/products\/business-certified-appraiser-certification-program\"><span class=\"s3\">Business Certified Appraiser Certification Program<\/span><\/a><\/span><\/li>\n<\/ul>\n<p class=\"p5\"><span class=\"s4\"><a href=\"https:\/\/learning.intlbca.com\/\"><b>ISBA Learning<\/b><\/a><\/span><span class=\"s1\"><b>:<\/b>\u00a0Looking for authoritative business appraisal courses, tools, webinars, and more? Stop trying to create resources from scratch and start taking advantage of having exactly what you need right at your fingertips in\u00a0<a href=\"https:\/\/learning.intlbca.com\/\"><span class=\"s4\">ISBA Learning<\/span><\/a>.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>This is one of the most popular questions I am [&hellip;]<\/p>\n","protected":false},"author":12,"featured_media":10390,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[32,30],"tags":[],"class_list":["post-10389","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-appraisers","category-general-blog"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v19.4 (Yoast SEO v19.13) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What Does a Business Appraisal Cost? 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