The cost of hiring a business valuation expert will depend upon a number of factors including the size and type of business, the accessibility of business financial information, the accuracy of the business records and the type of report being prepared. The cost of a business valuation can range from $10,000 to $50,000 or more, depending on the complexities. You should expect to pay a retainer before any work is started which can be as much as the entire expected fee. In the case of a very small business, an expert may perform valuation services for a fee that is less than the above range. You should discuss with the expert any scope limitations, the type of report and any other pertinent factors.

Professional standards dictate the minimum information that must be included in a business valuation report. However, in a divorce litigation setting the reporting requirements may be waived, allowing the expert to tailor the report to the needs of the client and the legal process. A letter stating the expert’s opinion will be less expensive than a summary report or a detailed report, but may lack credibility, especially if the other party to the litigation has obtained a more comprehensive report. The size and value of the business should be considered. Generally, the value of a very small business can be successfully communicated in an abbreviated report, leaving the comprehensive report for larger business operations.

The time it takes to prepare a business valuation analysis can vary from a few hours for a very small business (i.e. Pizza Shop) to hundreds of hours for a large business (i.e. Product Manufacturer). Business financial information includes tax return filings, financial statements, general ledgers, bank statements, invoices and customer billing records. Obtaining accurate financial information in a divorce setting can sometimes be difficult. In some cases the business owner may need to be court ordered to produce business records which causes delays. Financial records must then be analyzed by the appraiser and questions must be answered promptly. The use of outside experts to conduct equipment or real estate appraisals will also delay a project if not addressed at the beginning of the engagement.

If two or more experts differ in opinion as to the value of a closely held business and the difference is substantial, the cost of retaining the expert will likely increase as the expert is called upon to testify. In some instances, the expert may further assist the attorney with an analysis of the opposing party’s expert report. These additional services are billed in addition to the business valuation service. Asking the experts to discuss their differences may help identify facts that one failed to consider and may minimize costs to litigate. However, valuation experts may not be persuaded by another expert’s perspective and this process can be counterproductive, allowing the opposing party to build a better case for their expert’s opinion.