Differences in business appraisal results

So why do you run across business appraisal result differences?

You might think: if all business appraisers follow the standards such as USPAP and AICPA SSVS how come the results differ? The main reason is that clients influence the outcome of professional business valuations. Business people have a reason for business appraisals and an idea of their own of what the company is worth.

The reason may affect what a client expects to see in a business appraisal. A buyer would prefer a lower number than a business seller. Just about all business valuations are used in some kind of negotiation – between business partners, in tax situations, financial reporting, raising funds or acquisitions.

It is likely that each party will have their own business appraisal and the results will differ based on the clients’ expectations. In theory it is possible to come up with an impartial business valuation. However, neither party is going to be satisfied with the figure.

In most real world situations the appraiser is acting as the client’s advocate. He or she is expected to support the client’s position by gathering the supporting evidence. In this sense the business appraiser is objective but not really independent. As a result, business appraisal result differences keep popping up.

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