Who Pays for a Business Valuation: Seller or Buyer?

The answer depends on the context. In most cases, the party that needs the valuation, or benefits most from it, is the one who covers the cost.

‍

When the Seller Pays

If you're a business owner preparing to sell, it’s standard practice to pay for a valuation before listing the business. A professionally prepared valuation helps you establish a realistic asking price, present your business credibly, and reduce uncertainty in the eyes of potential buyers.

Sellers often include a summary or full copy of their valuation in marketing packages or data rooms. This not only speeds up the sales process but also gives buyers a clearer picture of how the price was determined.

‍

When the Buyer Pays

On the buyer's side, valuations typically come into play during due diligence. A buyer may hire their own advisor to assess whether the asking price is reasonable, evaluate the company’s risk profile, or estimate potential returns. These reviews may be informal or highly detailed, depending on the buyer’s goals and the complexity of the deal.

In these scenarios, the buyer usually pays for the valuation or financial review. It’s part of their broader effort to verify the numbers before finalizing the deal.

‍

Internal Buyouts and Successions

When a business is transitioning internally, through a family succession, employee purchase, or partner buyout, the responsibility for the valuation can vary. Sometimes the business pays, especially if the valuation supports a broader strategic need. Other times, the parties agree to split the cost or treat it as part of the negotiation.

If the transaction is being financed, lenders may also require a third-party valuation to validate the price. In those cases, the financing party may influence who pays or what level of report is required.

‍

What If Both Parties Want a Valuation?

In some deals, both the buyer and seller choose to obtain separate valuations. This can be useful when there’s disagreement over price, or when each party wants independent analysis. These differences often become a negotiation point and can lead to deeper discussions about risk, opportunity, and assumptions. In these cases, a third-party valuation may be used as a tie-breaker or neutral reference point.

‍

Final Thoughts

There’s no universal rule about who pays for a business valuation. In general, the party that requests it or needs it to advance their goals is the one who covers the cost. Sellers often pay to prepare for market. Buyers may pay during due diligence. In internal transitions, the cost is often shared or negotiated.

No matter the situation, a valuation can help reduce risk, clarify expectations, and keep the deal moving forward. If you're not sure which type of valuation fits your needs, we're happy to help you choose the right option.

Contact us or view pricing to start your valuation today.