Why Is The “Purpose of the Business Valuation” So Important?

The Purpose of the business valuation is the reason you are doing the business valuation.

Different purposes will require different levels of work product and perhaps completely different reports.   These factors can produce very different values for the business.  Therefore it is important to be straight about the actual reasons for the report.

I am saying this because sometimes clients are afraid to reveal the true purpose of the report.  This never works out well for them.

A business valuation report is going to be very different for litigation than for an Estate and Gift Tax filing.  What may be a perfect business valuation and report in one case is probably malpractice in the other case.

In addition, business evaluators, to protect themselves from misuse of their reports limit who may use the report and how the report is to be used.  Therefore,  if you do not give the correct purpose, you may not be able to use the report at all.

It is important to be clear with the actual purpose or you may be restricted from using the report as you intended.  Even if revealing the true purpose is uncomfortable to you, please do it for your own protection.


Clients choose Harvest Business Advisors for our accurate business valuations and our consistent ability to deliver the highest price in the smoothest sale transaction possible. Harvest provides business brokerage, business valuation, and business succession planning services. We have extensive experience in the information technology and professional services, manufacturing, distribution, and contracting fields. We maintain offices in Maryland, New Jersey and Virginia. Connect with us at info@harvestbusiness.com or 443.334.8000 to discuss selling your business, ordering a business valuation or buying a business.