Beware of Low-Cost Low-Wisdom Valuations

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The client whose financial fortunes may rely on the quality of work or the effectiveness of testimony by his valuation expert should probably not make a decision on hiring a valuator based primarily on lowest fees. In business valuation, the low-end software-driven product should be approached with caution. In general, these products are designed to give quick, and not necessarily accurate answers to price shoppers, and by design deny the client the expertise of the appraiser's many years of valuation wisdom. Users should beware of any valuator who is willing to render an opinion of value without a site visit, personal interview, and hands-on inspection of the company's financial and administrative records. 

A valuation is not the place to cut corners. A low-cost valuation might not survive a rigorous cross-examination or a low-wisdom valuation could trigger an IRS audit or litigation. 

The following is a check list of minimum requirements for a valuation engagement: 

  1. Your valuator is a Certified and Accredited Professional; 
  2. Adherence to the Uniform Standards of Professional Appraisal Practice (USPAP) and Statements on Standards for Valuation Services (SSVS); 
  3. Performs on-site visit; 
  4. Conducts a personal interview; 
  5. Hands-on inspection of the company's financial and administrative record; and 
  6. Has the experience to provide witness testimony. 
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