Steve Sink has a post on IowaBiz entitled Using an appraiser to value the business. It’s a worthwhile read.
Steve brings up a good point that many buy/sell agreements are silent on the qualifications of appraisers. He writes that the qualifications of appraisal firms should be specified based on their size, the scope of their business, and perhaps, on their specific industry expertise.
Of course, business appraisals can be expensive. Consequently, I often advise clients to establish a formula for how they will value the business when we draft the buy/sell agreement. This approach not only lowers the expenses for the the buyer and seller upon sale but also provides greater certainty to the eventual purchase price.