Who needs our valuation services?

Anyone with a claim to an economic interest who cannot or should not take action without full information can benefit by knowing the estimated value. Economic claims come in many different forms. Some examples include partial or full equity ownership in a private or public company, stock options, restricted stock, customer list, patent or other type of intellectual property, partnership interest, software, private or public company bond or bank loan, financial instrument, or portfolio of financial instruments.

How much does a business valuation cost?

Business valuation fees range considerably and depend on many factors, not the least of which is what the appraiser is asked to value, the purpose of the appraisal, and the availability of requisite financial and tax information. Another important determinant is the amount of work required by the appraiser to comply with professional standards. Members of the American Society of Appraisers, including BVA, LLC professionals, are required to comply with the relevant parts of the Uniform Standards of Professional Appraisal Practice (USPAP). According to Steven F. Schroeder, USPAP compliance “has increased the amount of work appraisers must do, even for simple appraisal assignments” (“How Much Should a Business Appraisal Cost?” Inc. Magazine, July 2003).

While most people look at the explicit cost of an appraisal, few look at the cost of not getting a professional business valuation. Consider the following situations. Two partners own a business and decide to sell. Without an appraisal, they may end up getting too little. In a divorce situation, one spouse may own a business and want to keep it, requiring an opinion of value to determine settlement. An appraisal can provide insight about ways to enhance the company’s value. This is true even if an owner plans to eventually sell the business. An appraisal provides critical information about a company’s business and financial risks, allowing the owner to make effective changes. A bank lender, private equity investor or venture capitalist might require a valuation before committing funds or for purposes of structuring the financing. The possibilities are endless.

Why is it important to hire an independent appraiser?

Independence is becoming a huge issue for many reasons. Investors, lenders, and other interested parties are no longer willing to look the other way when it comes to protecting their interests. They want accountability and that is often hard to validate when work is done by someone other than an independent third party. Moreover, regulators now prohibit many auditors from providing consulting services, including valuation work. According to a January 22, 2003 press release issued by the U.S. Securities and Exchange Commission:

<< Section 201 of the Sarbanes-Oxley Act lists nine non-audit services that, if provided by the accounting firm, impair the firm’s independence. The rules approved for adoption by the Commission, will define the prohibited services as follows…

Appraisal or valuation services, fairness opinions, or contribution-in-kind reports
Appraisal and valuation services include any process of valuing assets, both tangible and intangible, or liabilities. Fairness opinions and contribution-in-kind reports are opinions and reports in which the firm provides its opinion on the adequacy of consideration in a transaction. These rules will prohibit the accountant from providing such services unless it is reasonable to conclude that the results of these services will not be subject to audit procedures during an audit of the audit client’s financial statements. >>

Are there different kinds of valuation reports?

Yes. In fact, there are some circumstances where it simply would not make sense to get a full-blown valuation report. When you call BVA, LLC, we’ll talk about your needs, taking into account the purpose, your budget, timetable, and intended report distribution list. This enables us to recommend an appropriate type of service. In some situations, you may not have a choice if a lender, investor, insurer, or legal authority requires a specific type of analysis.

What does a typical valuation report include?

That depends on the type of report which in turn depends on the precise nature of the engagement. According to the 2005 version of the Uniform Standards of Professional Appraisal Standards (“USPAP”), Standards Rule 9-2, an appraiser must identify many things when developing “a business or intangible asset appraisal”, including the client and other intended users of the report, effective valuation date, type and definition of value, what exactly is to be valued, scope of work, unusual assumptions and relevant hypothetical conditions.

Are you willing to speak with us initially without charge?

Yes. There is no charge for an initial confidential consultation up to one hour. That gives us a chance to ask you questions about your problem and respond with a recommended solution and the related fee.

How are fees determined?

A fixed fee is charged for appraisal work and reflects the complexity of the engagement. In contrast, an hourly rate is charged for consulting work such as a review of a business plan. In either case, there are no contingent fees, making it possible for us to ensure independence and objectivity.

What if i don’t need a full time appraisal?

You can still benefit by hiring BVA, LLC to assist you with a “ball park estimate” when you cannot make a business decision without additional information.