When to get a professional valuation

The short version

• A professional valuation is an independent estimate of what your business is worth, from someone with no stake in the sale.
• It is most useful before you decide whether and how to sell, and before any sale to family, partners or employees.
• It is different from a broker's opinion of value. Both have uses.
• If your buyer uses an SBA loan, the lender orders its own valuation. Yours does not replace it, and theirs does not work for you.

What it is

A valuation is a written estimate of value prepared by a trained professional. It is built from your financial records, your industry and the market for businesses like yours.

Accountants who follow the professional standard for valuations offer two levels of work. A valuation engagement leaves the method to the professional and ends in a "conclusion of value." A calculation engagement uses methods you and the professional agree on in advance, with less work, and ends in a "calculated value." Either can be a single number or a range.

For planning a sale, a calculation is often enough. Ask which one you are buying.

The credentials to look for

Five credentials are widely recognized for business valuation. They are ASA (Accredited Senior Appraiser), CBA (Certified Business Appraiser), ABV (Accredited in Business Valuation), CVA (Certified Valuation Analyst) and BCA (Business Certified Appraiser).

These are the same five the SBA accepts from the appraisers lenders hire. A professional with one of them works to the same kind of standard the buyer's lender will use.

If your buyer uses an SBA loan

Starting October 1, 2026, under SBA rules (SOP 50 10 8.1), the lender must get an independent valuation for a business purchase it finances with an SBA loan. The only exception is a small sale, with a business price of $350,000 or less, where the lender may value the business itself, unless the buyer and seller are closely related. The lender chooses the appraiser. The appraiser works for the lender, and the valuation covers the business only. Any real estate is appraised separately.

This applies only to buyers borrowing through the SBA. A buyer paying cash or using a conventional bank loan is not bound by it.

It matters to you for one reason. The lender will not lend more than its own valuation supports. If that valuation comes in below the agreed price, the buyer has to cover the difference some other way, or ask you for a lower price.

Your own valuation will not satisfy the lender. It does tell you in advance whether your price is likely to hold up.

When it is worth it

Before you decide. Knowing the range changes the decision itself: when to sell, whether the number meets your needs, what to work on first. Only 27 percent of Baby Boomer owners in the Exit Planning Institute survey who planned to leave within five years had completed a formal valuation.

Before a sale to family, partners or employees. These sales often happen without a market test. An independent number protects both sides and the relationship. It also matters for tax. A sale to family below fair market value can be treated in part as a gift.

When you sell on your own. Without a broker, someone still has to set the asking price. An independent valuation gives you a number you can explain.

When there is more than one owner. Co-owners often need an agreed value before they can agree on anything else.

A valuation or a broker's opinion of value

A professional valuation is prepared by a credentialed appraiser to a written standard. It is paid for by the hour or by the job. Its value is independence and a documented method.

A broker's opinion of value is a view of what the market will pay, from someone who sells businesses. It is often free. Its value is recent experience with real buyers. It comes from someone who would like to list your business.

Many owners find both useful.

How long a valuation lasts

A valuation describes one point in time. If your sale is years away, expect to update it as your results change.