Clients often ask us whether they need a valuation or a market appraisal.
The answer has a lot to do with the ultimate purpose of the valuation or market appraisal. For example:
- Does the valuation/appraisal need to stand up in a court of law?
- Will the valuation/appraisal form part of a transaction/settlement process?
- Is the client seeking an indicative view of a business' fair market value and the likely factors that add to and detract from that value?
So what's the best option for me?
Market appraisals and valuations are both robust assessments of a business' worth and fair market position.
If you are seeking an 'indicative view' of a business' value, then a market appraisal is a cost-effective means of achieving this.
If you are seeking a document that:
- stands up in a court of law, or
- can be presented to a bank for finance purposes, or
- can be used to help settle a dispute, or
- can be used to support a share or purchase transaction,
...then a sworn valuation is appropriate.
A sworn valuation (conducted by a Certified Practising Valuer) is much more detailed than an appraisal. It comes with a specific value related to the business and verifies that value against the methodology used by the valuer.
The following infographic summarises the differences you can expect to see between a JPAbusiness Market Appraisal and Valuation:
If you are interested in seeking a market appraisal or valuation for your business, or for a business you’re considering purchasing, contact the JPAbusiness team on 02 6360 0360 (Orange) or 02 9893 1803 (Parramatta) for a confidential, initial discussion.
You can also visit the Valuations section of our website for more information about our Valuation and Market Appraisal services.
James Price has over 30 years' experience in providing strategic, commercial and financial advice to Australian and international business clients. James' blogs provide business advice for aspiring and current small to mid-sized business owners, operators and managers.