The Complexities of Valuations: Why Two Professionals Disagree

By Michael D. Rubin, CEO & Founder · Updated September 2026 · 760 words

Two qualified professionals can value the same company differently because a valuation rests on judgment calls about which earnings to use, which comparisons apply and how much risk to assume, and because every valuer depends on the accuracy of the information the owner provides. Differences are normal. What matters is whether the reasoning behind a number is visible and can be tested.

An owner does not need to become a valuation expert. But knowing where the judgment sits lets you ask the right questions of anyone who hands you a figure, including us.

Where the judgment sits

Judgment enters in at least six places, and small differences in several of them compound. A slightly different earnings base times a slightly different multiple can produce a noticeably different result.

• Normalizing adjustments. Which owner-specific and one-time costs are added back to earnings, and how generously.
• The earnings period. Last year, the trailing twelve months, a weighted average, or a forecast.
• Comparable transactions. Which past sales count as similar, since no two private companies are identical and deal data is incomplete.
• Risk. How much to discount for customer concentration, owner dependence, industry cycles and the quality of the records.
• Weighting of methods. How much weight to give an income approach, a market approach and the value of the assets.
• The standard of value. Fair market value for tax purposes, investment value to a particular buyer, or liquidation value, each producing a different answer.

Factors that resist measurement

Some features of a company are simply hard to price. Intellectual property and other intangibles have no obvious market price. A company that sells one product or relies on one or two customers carries risk that different valuers weigh differently. Ownership through an employee stock ownership plan (ESOP) can limit how easily the company can be sold. A business late in its industry's life cycle, or dependent on a single supplier, faces questions about how long current earnings will last. On each of these, reasonable professionals can land in different places.

The data has to be right

A valuer normally has to assume that the financial statements and other information supplied are accurate. If revenue is recorded in the wrong period, inventory is overstated or a liability is missing, the valuation inherits the error. A buyer's due diligence will usually find it later, and the price will move then, at a worse moment for the seller.

This is one reason owners benefit from cleaning up their records before any valuation that will be used in a sale. The more reliable the inputs, the narrower the range of reasonable answers.

It is also why an owner should not treat any single figure as fixed. A valuation is a reasoned estimate at a point in time, based on the information available then, and it should be revisited when results, markets or the company itself change.

How to read a valuation you have been given

• What was the purpose, and which standard of value was used?
• Which financial statements were relied on, and were they reviewed or audited?
• Is every adjustment to earnings listed with a reason?
• Which comparable transactions or data were used, and why are they comparable?
• Why was this multiple or discount rate chosen, and what would change it?
• How sensitive is the result to the main assumptions?
• Who prepared it, with what credentials, and were they independent of the outcome?

Three kinds of number, three uses

An online calculator applies generic multiples to a few inputs; it cannot see your adjustments, customers or contracts. An M&A advisor's opinion of value reflects what buyers are paying in current deals for companies like yours. A formal third-party valuation is a documented report prepared to a professional standard, suited to estates, gifts, partner disputes and lenders. Our answer on what makes a formal valuation more credible than an online calculator compares them in more detail.

Each has its place. The mistake is using one for a job meant for another, such as quoting a calculator figure to a buyer or relying on an estate valuation, which may be conservative by design, to decide whether an offer is fair.

Where MDR & Associates fits

We give owners a free, confidential opinion of value, a low-to-high range, after reviewing three years of financials, and we explain the assumptions behind both ends. When a formal written report is needed, our business valuation service provides one at a separate price. You can meet the people who do this work on our team page. For a first range, request a free valuation snapshot.

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Questions owners ask next

Should I get two valuations and average them?

Averaging hides the reasons they differ. It is more useful to ask each valuer to explain the gap: usually it comes down to one or two assumptions, such as an add-back or the risk discount. Deciding which assumption is right tells you far more than a midpoint.

Why was my valuation lower than the offer I received?

A formal valuation often measures fair market value on your stand-alone results. A strategic buyer may pay more because of savings or growth it expects from combining with your company. That difference is real but specific to that buyer, which is why competition among several buyers matters.