KEYS TO FINDING A GOOD BUSINESS APPRAISERBusinessEditors Pick by Bernard Taiwo - October 20, 20220 Share Share on Facebook Share Share on TwitterTweet Share on Pinterest Share Share on LinkedIn Share Share on Digg Share KEYS TO FINDING A GOOD BUSINESS APPRAISERAppraisers are agents who establish the value of businesses, personal property, intellectual property (such as patents, trademarks, and copyrights), and real estate through a process known as valuation or appraisal. The demand for valuation of business enterprises has increased in the last several years in many industry sectors for a variety of reasons, including the rise in corporate restructuring, rising incidences of litigation (such as divorce, in which value and possession of closely held businesses may be hotly contested), changing employee-compensation packages, continued purchases of existing businesses, and the proliferation of employee stock ownership plans (ESOPs), which require annual appraisals of value.Indeed, the dramatic surge in popularity of ESOP plans accounts for a significant portion of the increase in appraisal/evaluation activity across the global business landscape.Problems In The Business Appraisal IndustryMany business owners and valuation experts contend that the business valuation industry struggled with a number of significant problems in the late 1990s. These difficulties inevitably had an impact in small and large businesses that solicit the services of its members. Low certification standards have allowed a glut of inexperienced appraisers into the field, knocking the bottom out of the fee structure (for the industry) and leaving clients questioning the opinions they are buying. Changes made by the federal regulatory agencies to improve the quality of work in the appraisal industry may have had the opposite effect, by flooding the industry with appraisers and reducing the amount of work available for them.See also FG begins free business name registration for non registered MSMEsFinding A Qualified AppraiserBut while the business appraiser industry is a troubled one in some respects, consultants hasten to add that many qualified appraisers do exist, and they can be of valuable service to small business owners who take the trouble to investigate the merits of various appraisers. Keys to finding a good appraiser include the following:See also HOW TO WORK TOWARDS BETTER COMMUNICATION Network: Ask around, and then ask around some more. Talk to people in your geographical area, even if their business aren’t just like yours; talk to people with similar businesses, even if they are not in your geographical area. Appraisal is a fraternity, and once you know who is in the fraternity, who’s respected, you’ll know who to go to. And, very importantly, if the reasons you are looking for a valuation has anything to do with taxes, or is likely to somewhere down the line, find out who is respected by Internal Revenue Service – who do they use to do their valuation work?Look for experience and education: Appraisers with significant experience and a good educational background (MBA or CPA) are far preferable to those who are limited in their area. Moreover, some analysts believe that the appraisal industry is moving towards increased specialization (office buildings, hotels, professional practices, retails outlets, etc.); if possible, find an appraiser who is familiar with your business area. See also HOW TO DIFFERENTIATE REWARDS FROM MERIT PAY AND THE PERFORMANCE APPRAISALRecognize that valuations vary from client to client: Appraisals of business can vary significantly in terms of their cost, both in terms of time and money. Learn about standard fees imposed on business that most resemble yours in terms of size, health, and situation. The vicissitudes of most projects – the standard ESOP valuation being an exception – often make it impossible to charge on a flat-fee basis, or even give a responsible estimate of hourlies.Find a licensed appraiser: The relative ease with which people are able to secure certification in the appraisal business has drawn fire, but it does establish a ground floor of presumed competence. If you find this article useful, please share and subscribe to our newsletter.Share this:TwitterFacebookLinkedInWhatsAppSkypeTumblrMorePrintPinterestTelegramRedditPocketRelatedShare Share on Facebook Share Share on TwitterTweet Share on Pinterest Share Share on LinkedIn Share Share on Digg Share