Knowledgeable advisors and clients want peace of mind and are willing to pay a premium for it. But the challenge they face is in differentiating between great and “good enough.” So they ask questions like, How do I determine a fair fee? And, What is the process and what should my expectations be?

When choosing from among professional services, it is important to distinguish between technical mastery and relationship proficiency. Specifically, a “master” knows where he or she is proficient, and where outside expertise is crucial. Also crucial are insights into areas others have not considered—insights that distinguish a “best-in class” advisor from one who is merely transaction-oriented.

How can a business valuation expert provide peace of mind? Surprisingly, many providers do not guarantee their work and may not defend it, if challenged. We know this, as we are often retained to redo an engagement found wanting. Because our firm does a lot of dispute litigation, we have mastered both theory and practice, requiring “chess, not checkers.” We are one of a handful of firms that guarantee work products we will defend for a nominal upcharge,even though defending a work product often exceeds its original cost.

Why are valuation fees so different? For larger (typically accounting) firms, you pay for institutional overhead and infrastructure. Sadly, those performing the work are often less-experienced “jack of all trades” staffers, primarily performing tax, merger & acquisition/investment banking and financial services. So, they may charge based upon insufficient research data and analysis. What gets left behind is a true understanding of the purpose and engagement complexity that impacts scope of work and fees. For example, a gift of a member interest in an LLC holding a single apartment building may have fees starting at $6,000 for an IRS compliant report, whereas a partial liquidity event through an employee stock ownership plan of a manufacturer with $50 million in annual revenues and two classes of stock and proprietary assets may be $25,000 or more.

What makes a great valuation company? To begin with: transparency. You should know what you are paying for. The firm should have strong operational and financial chops; be willing to send a sample report of a similar industry/ purpose; respond to your initial inquiry within 24 hours; and supply a “not to exceed fee” quote and engagement letter to you within the same period. This should state the scope of engagement, who will perform it, the estimated time to completion and a list of preliminary documents needed. These criteria define a good transactional company. A great company will inquire what it is that you want to accomplish and with whom you are working; recommend strategies and professional connections; and indicate what the equity/assets performance levels are and what is driving value/ risk. This last step allows for revisiting how those equity and/or assets are managed and how legal provisions may impact value.

How to be prepared and to get started? To determine scope and fees, the business valuation expert will need to know the purpose, the company industry, the company sales and/or assets held, the size interest to be valued and the timeframe. The next steps will be clarifying questions and research and analysis, then a draft report, comments and edits, and timely delivery of the approved final report.

Striving to be great means placing clients before staff. However, “great” comes with a premium. What does peace of mind cost? You never know until something goes wrong. Our mandate is to take more time, do more research and analysis and ensure our work is defendable. After thousands of engagements over many decades, with only three “no change” challenges, we think premium pricing is a good investment.