When two experts perform a business valuation on a company, the likelihood of both of them having the same value is probably slim to none. Assuming the two experts are equally qualified, have well respected business valuation designations and equivalent years of experience, maybe the values would be similar. There are numerous factors that come into play and they have an impact on the value of the business.

Some of the items that can cause differences in value are: (1) differences in the information received by both experts, (2) access to management, (3) difference in the valuation methodology selected, (4) inadequate normalizing of financial statements, (5) difference in assumptions used and (6) mistakes. I will briefly discuss each of these below.

Differences in Information Received by Both Experts

When there is a disagreement, there will probably be lawsuit and the information available to the expert that does not have access to the financial data may receive little financial and non-financial information. The expert that works for the controlling shareholder has more financial and non-financial information available for their research and analysis.

Access to Management

The business valuation expert that is working for the controlling shareholder has access to management to get clarification on questionable events, the opposing business valuation typically does not. The more good information is received, the more reliable the conclusion of value.

Difference in the Business Valuation Methodology Selected

There are three approaches to perform a business valuation; (1) Asset Approach, ( 2) Market Approach and (3) Income Approach. Each of these approaches have several methods which can be applied. The methodology selected could provide different conclusion of value. It is up to the expert’s professional judgment as to which methodology to use.

Inadequate Normalizing of Financial Statements

Normalizing the financial statements relates to identifying and modifying anomalies that are not expected to continue in future and are “normalized” or adjusted to what is expected to happen with this type of expense in the future. I was once criticized for normalizing a shareholder’s compensation that lowered the profitability of the company. The idea is to determine the fair market value of compensation to a shareholder for a hypothetical buyer, not if the normalizing entry increases or decreases profitability.

Difference in Assumptions

The differences in assumptions can have a significant impact on the conclusion. They may or may not be the same or similar for both experts.

Some assumptions may include:

The valuation date.

Appropriateness of valuation methodology.

Methodologies for forecasting.

Determining normalizing entries, etc.


Some of the common mistakes are:

Combining sales transaction databases gathered from different sources using the market methods because these transactions are reported differently.

Selecting the incorrect data as it relates to what is known or knowable as of the valuation date.

A reviewer should carefully select the limiting conditions and assumptions and consider them in conjunction with the review scope undertaken.

The limiting conditions and assumptions should guide the stakeholders and reviewer as to what to expect as to how the company was valued.


I have earned the most difficult business valuation designations for valuations of closely held companies.

I have earned a Master’s Degree in Business Valuations and apply those skills to my everyday business valuations.

Richard Claywell has been valuing closely held companies since 1985. He has earned two of the highest designations in the business valuation field , the Certified Business Appraiser (“CBA”) and Accredited Senior Appraiser (“ASA”), Richard is a Certified Public Accountant, has a Master’s in Business Valuation (MBV) and holds the ASA, CBA, ABV, ICVS, CVA, MAFF, CFD, ABAR, CVGA, ICVS-A credentials.

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