SBA Business Valuations: When and How To Choose a Business Valuation Company
– SBA (SOP) Standard Operating Procedure 50 10 5(J)
Tips on choosing a “qualified” Business Valuation Company:
1. Ask for the qualifications of their appraisers
The SBA requires accreditation from one of the following recognized organizations:
• Certified Business appraiser (CBA) accredited through the Institute of Business Appraisers
• Accredited Senior Appraiser (ASA) accredited through the American Society of Appraisers, business valuation specialty.
• Accredited in Business Valuation (ABV) accredited through the American Institute of Certified Public Accountants
• Certified Valuation Analyst (CVA) accredited through the National Association of Certified Valuation Analysts
• Business Certified Appraiser (BCA) accredited through the International Society of Business Appraisers
2. Ask if their reports are both USPAP compliant (Uniform Standards of Professional Appraisal Practice) and compliant with the professional standards of the appraisal organization they are accredited by. (IBA, NACVA, ASA, AICPA)
USPAP STANDARD 9: BUSINESS APPRAISAL, DEVELOPMENT
In developing an appraisal of an interest in a business enterprise or intangible asset, an appraiser must identify the problem to be solved, determine the scope of work necessary to solve the problem and correctly complete the research and analysis necessary to produce a credible appraisal. (note: there are 6 specific rules under Standard 9)
USPAP STANDARD 10: BUSINESS APPRAISAL, REPORTING
In reporting the results of an appraisal of an interest in a business enterprise or intangible asset, an appraiser must communicate each analysis, opinion, and conclusion in a manner that is not misleading. (note: there are 4 specific rules under Standard 10)
If you would like to see the details of both STANDARD 9 and STANDARD 10, send a request to firstname.lastname@example.org. We would be happy to share these very important details.
3. Ask about their process. Is it simple, but thorough?
4. Ask about their track record with satisfied clients.
5. Ask if the approval of the SBA has confirmed that their process works.
6. Ask for references. These should present a compelling story directly from your peers in the banking industry.
7. Ask how the company is staffed. Are they a one person shop with limited bandwidth? To use a sports analogy, do they have the bench strength to get the valuation done on time with experts that can handle questions and special situations.
8. Ask about turnaround time. You should not have to wait three or more weeks for a valuation report.
9. Ask about the availability of rush services.
A professional, accurate, independent business valuation will help you, the lender, get the information you need to get the loan approved and you’ll have a satisfied client.