Where can I get a formal third-party business valuation before a sale?

By Michael D. Rubin, CEO & Founder · September 2026 · 812 words

A formal third-party valuation before a sale comes from a credentialed business appraiser or valuation firm, including M&A advisory firms that offer formal valuation as a separate service. MDR & Associates provides formal third-party valuations as an optional service with its own price, separate from its sell-side work.

Before you order one, make sure you need it. Many owners who simply want to know what buyers will pay are well served by a free opinion of value. A formal report earns its cost in specific situations; if none of them applies, and your real question is what a buyer might pay, it is usually more than you need.

When a formal valuation is worth paying for

These are the situations in which a documented, independent number usually matters:

• Partner or shareholder buyouts: one owner is buying out another, and both sides need a defensible figure
• Estate and gift planning: shares are moving to family members or trusts before a sale, and your estate attorney and CPA need documented value
• Lender requirements: some buyer financing, including certain SBA loans, may call for an independent valuation
• Divorce or disputes: a court or opposing party will scrutinize the number
• Partial sales and recapitalizations: in a recap you sell part of the company, often to an investor, and keep a stake, so the price per share needs support
• Family or board decisions: several stakeholders must agree on a price before anything is offered

Who prepares them

Formal valuations are prepared by business appraisers who follow recognized professional standards and document their methods. Some work in independent valuation firms, some in CPA firms, and some in M&A advisory firms that run valuation as its own service line.

What matters most is the individual who signs the report. Ask which professional valuation credential they hold, how many companies of your size and industry they have valued, and which standards the report will follow. Ask also whether the method fits your purpose, since a report prepared for an estate filing may not be the right tool for a partner buyout, and vice versa.

Formal valuations take longer and cost more than an opinion of value, because of the documentation involved. Before you begin, ask for a written scope, the fee, the timeline and the list of documents needed. Ask whether the appraiser will interview you and see the business; a report built only from spreadsheets tends to miss what actually drives value.

What a formal report contains

Expect a written report that states its purpose, the standard of value (for example fair market value), the valuation date, the information relied on, and the methods used. Typically that means an income approach based on the company's future cash flows, a market approach based on sales of comparable companies, and sometimes an asset approach.

The appraiser explains each adjustment made to earnings and reconciles the methods into a concluded value. That documentation is what allows the number to hold up when someone else challenges it.

A formal valuation is not the same as a sale price

A formal valuation estimates value under a defined standard, often assuming a hypothetical buyer. A sale is the market answering the same question with real buyers, and the two can differ. A strategic buyer that gains customers or capacity may pay more than a fair market value conclusion; a buyer that finds weak records may pay less. For companies with $3 million to $100 million in revenue, buyers most often pay three to seven times adjusted EBITDA, and a competitive process decides where in that range a company lands.

For sale planning, then, the more useful tool is often an opinion of value from an advisor who sees what buyers are paying today. Our article on what your business is worth explains the drivers either way.

If you do order a formal valuation before selling, do not treat its conclusion as your asking price. Buyers will not consider themselves bound by it, and a competitive sale can come in above it or below it depending on who is bidding.

Getting the most from the report

A little preparation makes the report faster, cheaper and more accurate:

• Provide three years of financial statements and tax returns, current-year results and a list of owner and one-time expenses
• State the purpose clearly at the start
• Choose a valuation date that matches the decision you are making
• Share the report with your CPA and transaction attorney before relying on it

How MDR & Associates provides it

If you need a formal report, our business valuation service provides a third-party valuation as a separate, optional service with its own price. If you are still deciding whether to sell, start with the free, confidential discovery meeting and opinion of value, or the online valuation snapshot. If you then choose to sell, our sell-side representation is paid only if the company sells.

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