Frequently Asked Questions
How long is a business appraisal valid?
Valuations depend on many factors, all of which can change. These include critical assumptions (such as management continuity), the industry outlook, historical financial performance, assumptions about and projections of future results, prices of comparable companies and the company’s earnings potential. Typically, a valuation will be good for at least a year.
Is the value of a public company a good indication of the value of my business?
Public companies with access to public markets are typically worth more than most closely held businesses. Choosing the correct multiples requires an in-depth analysis by a qualified business appraiser.
How much is a business appraisal going to cost? Is it similar to a real estate appraisal?
A business appraisal is much more complex and takes a lot longer to complete than an appraisal of a house. Each assignment is different, and each appraiser has a different fee schedule. Typically you will have to spend several thousand dollars to get a full appraisal report.
I am thinking about selling either part or all of my business. Should I get a business appraisal?
Business appraisers can often help people determine an appropriate asking price for their business. Generally a limited scope appraisal is sufficient and can be done for less cost than a full appraisal.
If I gift stock, do I need a business appraisal?
We recommend that a full appraisal be done whenever a potential gift tax is involved. If the Internal Revenue Service audits the gift tax return, the burden of supporting the value of the gift is the responsibility of the taxpayer. A full appraisal should help establish the value of the gift and demonstrate to the IRS that everything was done properly.
Can my CPA appraise my business?
For gift tax returns filed after February 16, 2007, the appraisal must be prepared by an appraiser that has successfully completed college or professional-level coursework that is relevant to the property being valued and obtained at least two years of experience in the trade or business of buying, selling or valuing the type of property being valued. Unless your CPA meets these requirements, they should not prepare an appraisal for a tax return. Even if your CPA meets these requirements or if the appraisal is not for tax purposes, it is probably not a good idea for them to prepare an appraisal for you. Since they have an existing relationship with you, it would be difficult for them to achieve the independence necessary to effectively appraise your business.