Company Appraisal: Use, Types, and Criticisms

When planning a business sale or refining your strategy to attract investors, understanding whether you need a company appraisal or a business valuation is essential. Both help determine your company’s assets, market value, and appeal to potential buyers, but they serve different purposes.

What Is a Company Appraisal?

A company appraisal is a formal assessment conducted by a qualified appraiser—often an accredited senior appraiser or certified valuation analyst. It evaluates physical assets, intangible assets, financial statements, and market data to produce a report that can withstand scrutiny in legal conflicts or tax filings. 

You can review the ASA standards and NACVA international standards for more on these requirements.

When Appraisals Are Typically Used

Common in legal conflicts, estate planning, or loan applications, appraisals document the economic value of your business at a given time. They offer a clear picture of the business’s worth that external parties can trust. 

Baton’s business appraisal guide explains when these services are most appropriate.

When You Might Not Need an Appraisal

If you aim for a higher selling price in the open market, a business valuation is often the most effective way forward. Valuations focus on other factors buyers care about—like profit, cash flow, and industry fit within the same industry. 

For a detailed comparison, see Baton’s business valuation overview.

Common Appraisal Methods

Appraisers may use an income-based approach (evaluating financial statements, cash flow, and discounting to present value), an asset-based approach (weighing the company’s assets and liabilities), or a market-based approach (using market data and comparable sales from the same industry). 

For more, see the ASA’s standards and ethics.

Why Some Sellers Avoid Appraisals

There are several legitimate critiques of the company appraisal process—especially from business owners focused on speed, efficiency, and real-world results.

1. Appraisals Are Expensive

Business appraisal cost is high—often $3,000–$10,000 as detailed in Baton’s cost breakdown. That’s a steep price for information that may not materially impact your sale outcome—especially if buyers ignore the appraisal and rely on their own diligence instead.

2. They Can Slow You Down

Appraisals take time. Most require 2–6 weeks to complete, depending on the firm and the depth of analysis required. That delay can be frustrating if you're trying to get your business to market quickly.

3. They Don’t Always Reflect Market Demand

An appraisal might peg your business at $1.5 million based on historical earnings and asset value. But if buyers in your industry are paying less—or if there’s high demand and low supply—you could end up underpricing or overpricing based on outdated logic.

In short, appraisals aim for legal defensibility, not buyer alignment. And in a dynamic market, that can be a mismatch.

When Appraisals Do Add Value

Appraisals excel when addressing legal conflicts or meeting lender requirements. A certified valuation analyst or qualified appraiser ensures compliance and accuracy.

What Buyers Actually Care About

Potential buyers prioritize financial statements, growth potential, and access to data that supports their decision to invest—not lengthy reports. They care about your balance sheet, margins, and how your business stacks up against others in the same industry.

What to Do Instead (If You’re Selling)

If your focus is on a sale, like many other success stories, start with a business valuation for speed and market fit. Baton provides valuations rooted in real market data, giving you a clear picture and practical next steps. 

Curious about your business’s value? 

Start with a free valuation from Baton Market. Fast, accurate, and built to support smart, successful exits.