There are many firms that offer business valuation services—but not all methodologies are alike. Depending on who conducts the valuation, the results can vary significantly—not only in dollar amount but also in how credible and defensible the findings are.
In this guide, we’ll explore three main categories of business valuation companies and outline the differences in their approaches, so you can make a more informed choice when selecting a valuation partner in Texas.
Large CPA Firms
Big-name accounting firms often conduct valuations “inside”
Interviews with business owners are unusual. On-site assessments? Even rarer. These valuations are frequently generated using in-house models and software tools, which can restrict how much analysts are permitted or able to adjust, and these adjustments are typically the difference between what is written on the paper vs the real-world.
If a business doesn’t conform neatly to a standard template, these inflexible systems can falter. Theoretical assumptions take precedence over real-world application.
Business Brokers and M&A Advisors
Business brokers represent almost the opposite of CPA firms. They tend to be quick-moving, deal-driven, and hands-on—but often lack the foundation in formal valuation methodology.
Most broker valuations are referred to as a “broker’s opinion of value” rather than a full-fledged fair market valuation and that’s exactly what they are.
Another concern is objectivity. Many brokers earn more thru upfront engagement fees than from commissions. This can encourage them be skewed toward earning the client’s business—rather than reflecting what the market will support.
It’s not unusual for these valuations to align more with the seller’s expectations than with buyer behavior.
M&A advisors tend to work on larger deals but follow a similar model. That said, even high-end M&A advisors may present inflated values if their fee structure rewards it.
Independent Valuation Specialists
Business valuation companies that focus specifically on business appraisals often fall in the middle between a CPA firms valuation department and a business broker or M&A advisor that is not financially incentivized. This is usually as balanced as it can become, between advanced theory and a hands on practical approach.
Top-tier valuation firms don’t choose between technical accuracy and market realism—they integrate both.
Nielsen Valuation Texas is a prime example of this hybrid approach. Reach out today to discuss your Texas business valuation.
