Your business is worth something—but getting that number right requires more than a guess. Hiring the wrong valuation advisor can cost you thousands in unnecessary fees or leave you unprepared for a sale. Here's what to ask before you commit.
Why Your Advisor's Background Matters
The valuation industry isn't one-size-fits-all. An advisor who specializes in SaaS companies may lack expertise in manufacturing. Before hiring, ask directly: What industries have you valued in the last three years, and how many deals? A credible advisor should cite at least 20–30 transactions in your sector within the past 24 months.
Also verify their credentials. Look for CVA (Certified Valuation Analyst), ASA (American Society of Appraisers), or CFA designations. These require rigorous training and ongoing education. Don't settle for someone calling themselves a "valuation expert" without formal accreditation.
Understanding Their Valuation Methodology
Advisors typically use three approaches: the income approach (discounted cash flow), the market approach (comparable company multiples), or the asset approach. Ask your candidate which methods they'll use for your specific situation—and why.
A competent advisor won't just pick one. They'll explain:
- Which approach suits your business stage and market conditions
- What discount rate or EBITDA multiple they're applying and why
- How they'll handle growth projections and risk adjustments
- Whether they'll produce a single number or a range (ranges are more honest)
If they can't walk you through the logic, move on.
Fee Structure and Timeline Expectations
Valuation fees vary widely depending on complexity. For a small to mid-market business ($1M–$50M revenue), expect $5,000–$25,000. Larger or more complex deals run $25,000–$100,000+. Ask whether fees are fixed, hourly, or contingent on the valuation outcome.
Never hire an advisor on contingency—it creates a conflict of interest. They'll have incentive to inflate (or deflate) your valuation to close a deal or satisfy a buyer.
Timeline matters too. A solid valuation for a mid-market business takes 4–8 weeks. If someone promises results in two weeks, they're cutting corners.
Red Flags and Hard Questions
Ask these specific questions before signing:
- Have you been retained by buyers or sellers more often in my industry? (This reveals potential bias.)
- Will your report meet the standards of the American Institute of CPAs? (This ensures defensibility if challenged.)
- How do you handle disputes if a buyer challenges your valuation? (Good advisors stand behind their work and may offer expert testimony.)
- What assumptions are most sensitive to change in your model? (Honest advisors acknowledge uncertainty.)
If they get defensive or vague, that's a warning.
Comparing Multiple Advisors
Don't hire based on the first consultation. Get proposals from at least two or three qualified firms. Compare not just fees, but their depth of questions during discovery. A thorough advisor will ask about customer concentration, recurring revenue, management depth, and market trends—not just financial statements.
Also ask for references from past clients in your industry. When you call them, ask: Did the valuation hold up during negotiations? Would you hire them again?
Documentation and Report Quality
Your final valuation report should be detailed enough to defend in a deal or dispute. Ask whether the advisor will provide:
- A written valuation report (not just a spreadsheet)
- Executive summary explaining the methodology
- Detailed sensitivity analysis showing how the value changes with different assumptions
- Supporting market research and comparable company data
Reputable advisors will send samples. If they're hesitant, that's suspicious.
Finding the Right Partner
Comparing advisors takes time, but it's worth the effort. Platforms like Mercoly help you find and compare trusted Business Valuation & M&A Advisory providers in one place, so you're not starting from scratch with online searches. You'll see credentials, client reviews, and pricing upfront.
Your goal isn't the cheapest advisor—it's one who's credible, transparent, and aligned with your goals.
Frequently Asked Questions
Q: Should I get multiple valuations before selling my business? Yes. A second independent valuation ($5,000–$10,000) is cheap insurance if your asking price and buyer expectations are far apart. It clarifies whether disagreement is legitimate or just negotiating posture.
Q: How often does a valuation need to be updated? For most private businesses, annual updates suffice if nothing major changes. If you're in acquisition talks, you may need a fresh valuation every 6–12 months as circumstances shift.
Q: Can my accountant do my business valuation? Your accountant knows your financials, but they may lack the M&A experience and market data a specialist brings. It's often worth hiring a specialist even if your accountant assists.
Start your search today by identifying advisors who specialize in your industry and meet the credential standards above.