Selling Out: Appraiser's Role

The role of business appraiser or valuation expert is an example of a job that might be filled by your accountant, by your mergers and acquisitions consultant, or by a specialist (usually a CPA) you hire for this purpose.

Your need for an appraisal, and the kind of appraisal that will be done, really depends on the size and complexity of your business. If you are a small service company with few assets, or have only common assets like cars, real estate, and office equipment, you may not need to hire an appraisal specialist — your regular accountant's assessment of your book value may be adequate. You may also choose to rely on your business broker's assessment.

However, in many cases, it's worth the time and money to hire an experienced business appraiser. The value of your business depends on a very large number of interrelated factors. If you're to receive the full value of the business, but avoid setting the price so high that it drives away all potential buyers, you really need the analysis of an expert. Moreover, when buyers question your price during the negotiation process, it helps to be able to point to the precise reasons why your business is so valuable.

An appraisal from a business valuation expert can also be essential to prove the value of your company to the IRS, particularly if you are selling or giving it to relatives or other "insiders." If you embark on a gifting program that involves giving some stock to your children each year, you may need to get an annual appraisal for IRS purposes.