How to find a business valuation specialist for your sale

A business valuation specialist with the right credentials can produce a defensible, documented opinion of what your business is worth, one you can use for estate planning, a sale, a partnership dispute, or a loan. The right credentials matter because “business valuation” is a term a lot of people use, but the training and methodology behind it varies enormously.

What credentials actually mean

There are three credentials that signal real valuation training:

CVA. Certified Valuation Analyst Issued by the National Association of Certified Valuators and Analysts (NACVA), which was founded in 1991. Requires completion of a training program, a written exam, and continuing education. Most CVAs are CPAs with additional valuation training. Approximately 7,000 professionals hold a CVA credential in the United States, making it the most common credential you’ll encounter.

ABV. Accredited in Business Valuation Issued by the American Institute of CPAs (AICPA). Requires CPA licensure plus additional business valuation coursework and examination. Approximately 2,780 professionals hold the ABV designation, making it more selective than the CVA. Strong credentialing program with good market recognition.

ASA. Accredited Senior Appraiser (Business Valuation) Issued by the American Society of Appraisers. Requires extensive experience and a multi-day examination. Generally considered the most rigorous of the three, though less commonly held by the typical small business valuation specialist.

Formal valuation vs. estimate, knowing which one you need

The most common mistake owners make is paying for a formal valuation when they needed an estimate, or relying on an estimate when they needed a formal valuation.

You need a formal certified valuation when:

• You’re doing estate planning and the IRS may scrutinize the value
• You have a buy-sell agreement with partners that triggers on a specific event
• You’re going through a divorce and the business is a marital asset
• You’re transferring ownership to family members using gift tax exemptions
• You need to secure financing against the business

An estimate or broker opinion is usually fine when:

• You’re just trying to understand roughly what your business might be worth
• You’re in early planning stages and deciding whether to pursue a sale
• You want a benchmark before investing in formal planning

Questions to ask before hiring a valuation specialist

You’re making a significant financial decision based on their opinion. You’re allowed to ask hard questions.

1. What credentials do you hold? (CVA, ABV, ASA, any of these is a good sign)
2. What industries do you specialize in? A specialist who has valued dozens of HVAC businesses knows your market. One who has only valued restaurants doesn’t.
3. How many valuations have you completed in the past year? Active practitioners stay sharp. Someone who does two per year doesn’t.
4. What methodology do you use, and why? Common approaches include income approach (multiple of earnings), market approach (comparable sales), and asset approach. They should be able to explain which applies to your situation.
5. What will the report include? A proper certified report is a detailed document, typically 30 to 70 pages, that explains the methodology, the assumptions, the comparables used, and the conclusion.
6. Have you testified as an expert witness? Not always relevant, but it tells you something about how defensible their work is.

What the process looks like

A formal business valuation typically takes 2 to 6 weeks from engagement to delivery of the report. According to the Exit Planning Institute’s 2023 survey, only 27% of baby boomer business owners had completed a formal valuation, despite over half planning to exit within five years. That gap, between owners who want to sell and owners who know what their business is actually worth, is one of the most common ways value gets left behind in a sale.

You’ll be asked to provide:

• 3 to 5 years of tax returns or financial statements
• Current balance sheet
• A list of significant assets
• Information about the management team and key employees
• Details on customer concentration and revenue mix
• Any existing buy-sell agreements or prior valuations

The specialist will also do their own research on comparable business sales in your industry, this is part of the market approach to valuation.

Red flags to watch for

• No relevant credentials, or credential you can’t verify
• An unusually fast turnaround (a few days for a formal report is suspicious)
• Unwillingness to explain their methodology
• A conclusion that seems suspiciously convenient for whoever is paying
• No sample of a prior report to review

A good valuation specialist won’t mind you asking hard questions. The ones who get defensive about credentials are usually the ones worth avoiding.