Do I need a valuation or an appraisal? Understanding the key differences.
A business valuation or appraisal can help when selling, raising capital, or planning your next steps. This guide breaks down the key differences, so you can make an informed decision.
Business Valuation
What Is a Business Valuation?
A business valuation is a detailed, formal process that determines the true financial worth of your business.
When Do You Need a Business Valuation?
Selling Your Business – Ensure you get the right price based on data, not guesswork.
Raising Capital – Investors and banks require a valuation to assess your business’s worth.
Mergers & Acquisitions – Sets the basis for a fair deal.
Tax & Legal Purposes – Required for tax reporting, estate planning, or shareholder agreements.
Exit Planning & Succession – Helps structure a smooth business transition.
Who Conducts a Business Valuation?
A formal business valuation is performed by a credible valuation expert or accountant using rigorous valuation methods and market data.
Business Appraisal
What Is a Business Appraisal?
A business appraisal is an informal market estimate that provides a general idea of a business’s value, without the depth and legal weight of a full valuation.
When Do You Need a Business Appraisal?
You’re Exploring a Sale – A quick way to gauge your business’s worth before committing to a valuation.
Market Positioning – Understand how your business stacks up against competitors.
Strategic Planning – Use an appraisal to benchmark growth potential before making financial decisions.
Who Conducts a Business Appraisal?
Business brokers, accountants, or industry professionals who use market trends and industry data rather than deep financial analysis.
Valuation vs. Appraisal (Summary)
Business Valuation | Business Appraisal |
|---|---|
For formal financial decision-making | An informal market estimate |
In-depth financial review | General industry estimate |
Essential for sales, investments, M&As | Exploratory use only |
Recognised for tax and legal | NOT recognised for tax and legal |
Higher cost, more detailed | Lower cost, quicker estimate |
If you’re selling, raising capital, or planning an exit, you need a business valuation. If you just want a quick market estimate, an appraisal may be sufficient.
Get an Accurate Business Valuation Today
Understanding your business’s worth is critical for financial success. Whether you need a detailed valuation or a market-based appraisal, our business valuation experts are here to help.
Why Choose RJD Advisory?
Australian Business Experts – Specialising in small and medium-sized enterprises.
Credible Valuation Professionals – Accurate, data-driven insights.
Tailored Advice – No one-size-fits-all approach—just practical, actionable guidance.
Need Help With Your Business?
Schedule a quick call to find out how I can help
