Fees for a business appraisal can vary widely depending on a number of factors including:
· Type of appraisal assignment
· Degree of complexity involved
· Estimated time to complete the assignment
How are Business Appraisal fees typically paid?
Business appraisal fees are paid on either an hourly rate, flat fee or some combination thereof. Most of the time, the appraiser is paid a retainer at the commencement of the assignment with an agreement as to what services will be provided for this, along with a schedule for additional payments and delineation of any possible additional services and costs. The retainer is generally not refundable unless a prior agreement is made specifying circumstances whereby the assignment might be terminated if the need for the appraisal ceases to exist (for example, settlement of a business dispute).
Frequently a business appraiser can estimate the time to complete parts of the appraisal assignment but other parts may be uncertain. Examples of the latter include forensic assignments and expert witness testimony where the hours to complete the job could vary considerably based on factors outside of the control of the business appraiser. Ask the business appraiser for a written agreement at the commencement of the assignment.
Bottom line: what will this cost?
The cost can range from $50 to $500+ per hour or $500 to $15,000+ total for appraisals of many small, closely-held businesses. Appraisals of medium to larger businesses or more complex assignments can be many times higher. Some of the factors that come into play include the business appraiser’s experience, operating expenses, location of his or her practice, etc. Many times it is a wise choice to engage the most experienced business appraiser even if his or her cost for the business appraisal is substantially higher than other business appraiser’s fee quotes. Other times, it may not be necessary or cost effective to hire a business appraiser with, say, a minimum fee of $15,000 to appraise a very small business in a fairly routine assignment (if there really is such a thing as a “routine” assignment). Conversely, hiring a business appraiser who appraises mostly very small businesses for a complex matter involving a larger business would not be wise.
In most cases, business appraisers will not work on a contingent fee basis (whereby payment would be based on a certain percentage contingent upon a specified outcome) as this is a violation of appraiser ethics. There are non-appraisal assignments (i.e. certain consulting assignments) where a business appraiser could work on such a basis, however.