Quick answer: A business valuation is an estimate of what your company is worth, based on financial performance, assets, market position, and growth potential. Most small and mid-sized businesses sell for a multiple of earnings (SDE or EBITDA) that varies by industry — typically 2–4x SDE for small businesses. The fastest, lowest-cost way to get this estimate is a Business Opinion of Value (BOV) from a business broker; a Certified Valuation Report is the formal, defensible version used for legal, tax, or lending purposes.
A business valuation is the process of estimating a company’s economic value using financial analysis, market data, industry trends, and operational factors. It answers the question a buyer, lender, or court would ask: what would a willing buyer pay for this business under current market conditions?
Valuations typically weigh:
A Business Opinion of Value (BOV) is a market-based estimate of what a business could sell for today, prepared by a business broker or M&A advisor rather than a certified appraiser. It’s built from historical financials, comparable sales, current buyer demand, and industry transaction data.
A BOV is not a formal appraisal — it’s a practical starting point for owners who want a realistic number before deciding whether, when, or how to sell. Most brokers provide it at low or no cost as part of a sale consultation.
| Business Opinion of Value (BOV) | Certified Valuation Report | |
|---|---|---|
| Purpose | Estimate likely market value for planning or sale prep | Formal, defensible valuation for legal/financial/tax use |
| Prepared by | Business brokers, M&A advisors, intermediaries | CVA, ABV, or ASA credentialed professionals |
| Typical cost | Often complimentary or low-cost through a broker | Several thousand to tens of thousands of dollars |
| Best for | Owners considering a sale, exit planning, marketability | Litigation, divorce, estate planning, IRS reporting, lending |
| Deliverable | Concise report on market value and transaction readiness | Comprehensive report with documented methodology |
The core distinction: a BOV answers “what might my business realistically sell for?” A Certified Valuation Report answers “what is the defensible value of this business according to professional valuation standards?” Both are useful — they just serve different audiences.
Valuation professionals generally rely on one or more of three approaches:
A BOV from a business broker is typically low-cost or complimentary, since it’s usually offered as part of exploring a sale. A Certified Valuation Report generally runs from several thousand dollars to tens of thousands of dollars, depending on business complexity, industry, and the level of documentation required for its intended use (litigation, estate planning, lending, etc.).
A valuation answers whether the business can support retirement goals, what’s increasing or reducing value, and what sale price is realistic — replacing guesswork with data.
Identifying value drivers (customer concentration, owner dependence, margin opportunities, recurring revenue potential) lets owners target the initiatives that actually move enterprise value.
Adding partners, buying out shareholders, or resolving ownership disputes all require an objective number both sides can negotiate around.
Banks and investors evaluating SBA lending, acquisition financing, or growth capital often need a current valuation as part of underwriting.
Because so much owner wealth is tied up in the business, valuations are essential for estate transfers, gift tax considerations, and family ownership transitions.
Positive value drivers:
Value detractors:
Most advisors recommend updating a valuation every one to three years, or sooner after significant growth, an acquisition, or an ownership change. Owners planning an eventual exit often benefit from getting a BOV several years ahead of time — it surfaces value gaps and risk factors while there’s still time to address them before going to market.
Most brokers and advisors will request:
A BOV provides a market-based estimate using available financial and transaction data. It isn’t a certified appraisal, but it’s a reliable planning tool for owners deciding whether and when to sell.
Yes. Because a BOV identifies specific value drivers and detractors, owners can use it to address weaknesses — like customer concentration or owner dependence — before going to market, often increasing the eventual sale price.
If you’re exploring a future sale, a BOV is typically the right starting point. If the valuation needs to hold up in litigation, divorce proceedings, estate planning, IRS reporting, or a lending application, a Certified Valuation Report is the appropriate choice.
The terms are often used interchangeably, but “appraisal” typically refers to a formal valuation engagement following recognized professional standards — closer to a Certified Valuation Report than a BOV.
Ready to understand what your business is worth? A Business Opinion of Value can help you identify opportunities, understand current market conditions, and build a roadmap for maximizing value before a future sale. Find a Murphy Business Sales office near you.
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