Reasons to Consider a Formal Business Appraisal

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We are happy to provide a “Broker’s Estimate of Value” to Hawaii business owners contemplating a sale of their business.  We know the Hawaii business market intimately, have access to extensive databases of sold business “comps” (comparable sales prices), and have detailed and proven methods for producing reasonably reliable estimates of value. 

That said, however, there is one very compelling reason for serious sellers to consider investing in a formal business appraisal:

A formal business appraisal increases both the likelihood/number of offers from buyers as well as the value of the offers. 

Why is this so?

• One of buyer’s primary reasons for not making an offer, or for making a low ball offer, is fear of overpaying.  An independent appraisal virtually eliminates this fear, allowing the buyers to make offers in confidence.
• Buyers understand that we are working for you and therefore don’t trust our estimates of value.
• A formal appraisal greatly reduces buyers’ perceived need to haggle.  Numerous studies have shown that most people dread haggling over price.  That’s why you will see sophisticated marketers (such as automobile dealers and computer companies) advertise “no haggle” pricing to consumers.  With a formal appraisal, offers tend to come in close to the appraisal price.
• Banks are more likely to provide financing

Other reasons to consider a formal appraisal:

• You will rest easier knowing you are not leaving money on the table
• The time to sell is generally faster, because having the valuation done up front: 1) increases buyer/ lender confidence and speed; 2) reduces due diligence requests; 3) avoids delays waiting for valuation later if one is required by the buyer’s lender
• The turnaround is fast, generally 5-7 business days from the submittal of all required information, and can be expedited for an additional fee.

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