Valuation Opinion: When You Need One, How It Differs From a Fairness Opinion
A valuation opinion is a documented professional conclusion about the value of a business, an asset, or an ownership interest, developed under recognized appraisal standards such as the AICPA Statement on Standards for Valuation Services (SSVS No. 1), the Uniform Standards of Professional Appraisal Practice (USPAP), and the American Society of Appraisers (ASA) Business Valuation Standards. A valuation opinion answers one question: what is the asset worth, and within what range. A fairness opinion is a related but separate animal. It uses valuation work as input, but it goes further and opines on whether the consideration in a specific transaction is fair, from a financial point of view, to a specific party (typically a board of directors). One is about value. The other is about fairness for a specific deal at a specific moment.
The distinction matters because the wrong type of valuation opinion can trigger an Internal Revenue Service (IRS) audit, blow up an Employee Stock Ownership Plan (ESOP) transaction under the Employee Retirement Income Security Act (ERISA), expose a board to a Revlon-duty challenge in Delaware Chancery Court, or leave a debt-financed acquisition (an LBO) without a Section 547 fraudulent-conveyance defense. Cost ranges also differ by an order of magnitude. A Calculation of Value can be done for five to fifteen thousand dollars. A large-deal fairness opinion can run past one million dollars. Picking the right product for the job, with the right appraiser, under the right standard, is the difference between a clean tax filing or a clean board minutes file and a multi-year fight.
This guide is the side-by-side comparison the search-engine results pages (SERPs) are missing. It walks through the five working types of valuation opinions (Calculation of Value, Conclusion of Value, Fairness Opinion, Solvency Opinion, and Transaction Opinion), the standards each must comply with, the situations that require each, the discount adjustments (DLOM and DLOC) that drive the most litigation, the firms that issue these opinions, and what each product actually costs in 2026. By the end, you will know which opinion to commission, which standard to require in the engagement letter, and which questions to ask before you sign.
Quick-reference matrix: the 5 valuation-opinion types at a glance
The fastest way to internalize the five products is a one-page comparison. Each row is a different opinion type. Each column is a decision input: who issues it, what standard governs, what it is for, what it costs in 2026, and what it cannot do. Treat this as the TL;DR for the rest of the guide. The deep dive on each row follows.
| Opinion Type | Governing Standard | Scope | Typical Use | 2026 Cost Range (USD) | Audit / Court Defensible |
|---|---|---|---|---|---|
| Calculation of Value | AICPA SSVS No. 1 (Calculation Engagement) | Limited, agreed-upon procedures | Internal planning, mediation start, ESOP feasibility | $5,000 to $15,000 | No (explicitly restricted) |
| Conclusion of Value | AICPA SSVS No. 1 (Valuation Engagement), USPAP Standards 9 and 10, ASA BV Standards | Full appraisal, all relevant approaches | IRS gift and estate, ESOP transaction, litigation | $15,000 to $500,000+ | Yes |
| Fairness Opinion | FINRA Rule 5150, SEC disclosure (Schedule 14A), Delaware case law | Opines on fairness of consideration to a specific party | Public M&A, take-privates, ESOP, conflicted transactions | $50,000 to $1,000,000+ | Yes (board fiduciary cover) |
| Solvency Opinion | Bankruptcy Code Section 548, state Uniform Voidable Transactions Act (UVTA) | Three tests: balance sheet, cash-flow, adequate capital | LBO, dividend recapitalization, lender protection | $50,000 to $200,000 | Yes (lender and board defense) |
| Transaction Opinion (DLOM / DLOC) | SSVS No. 1 plus IRS Rev Rul 59-60 | Specialized discount or premium quantification | Minority interest gift, FLP transfer, 409A | $10,000 to $75,000 | Yes (when paired with full report) |
Read the matrix as a decision tool. The top three rows climb up the rigor ladder. The bottom two rows are specialized products that usually sit on top of a Conclusion of Value rather than replacing it. The cost ranges are 2026 ranges drawn from published rate cards at Mercer Capital, Marshall and Stevens, Valuation Research Corporation, Stout, and Houlihan Lokey, plus public-deal-fee disclosures filed on Schedule 14A.
Valuation opinion vs fairness opinion: the critical distinction
The most common mistake in this space is treating a valuation opinion and a fairness opinion as interchangeable. They are not. They answer different questions, target different audiences, carry different liability profiles, and require different qualifications from the issuing professional. Conflating them in a board package or a tax filing creates a documentation gap that the IRS, the Department of Labor (DOL), or a plaintiff shareholder will exploit.
A valuation opinion opines on value. The output is a point estimate, a range of values, or both. It describes what an asset is worth on a defined valuation date under a defined standard of value (fair market value, fair value, investment value, or intrinsic value). It does not assess any specific transaction. The work product can be repurposed across tax, financial reporting, dispute resolution, and internal planning. The AICPA SSVS No. 1 governs the engagement, and the report follows the AICPA reporting framework. Detail on SSVS is published by the American Institute of Certified Public Accountants at aicpa-cima.com.
A fairness opinion opines on fairness. The output is a single sentence in the conclusion paragraph: that the consideration to be paid or received in a defined transaction is, or is not, fair from a financial point of view to a defined party as of a defined date. It is transaction-specific, party-specific, and date-specific. It cannot be repurposed. The audience is almost always a board of directors or a special committee charged with approving a transaction. Issuance is governed by FINRA Rule 5150 for broker-dealers (text at finra.org) and, for public deals, by Securities and Exchange Commission (SEC) disclosure rules requiring the opinion to be filed with the proxy. Delaware case law treats a credible fairness opinion as evidence that the board satisfied its duty of care under Revlon, Inc. v. MacAndrews and Forbes Holdings, Inc. 506 A.2d 173 (Del. 1986). The opinion text from that decision is at courts.delaware.gov.
The scope difference is sharp. A valuation opinion is broader, because it covers the whole company or asset and is durable across uses. A fairness opinion is narrower but deeper, because it must analyze one transaction in the context of alternatives, market check, premium analysis, accretion or dilution, and benchmarks against precedent transactions. The audience difference drives liability. A fairness opinion gives a board direct fiduciary cover, which is why public company boards almost always commission one even when not strictly required. A valuation opinion gives the engagement party (tax planner, ESOP trustee, divorcing spouse, expert witness) a defensible number but does not opine on whether a deal is good. Sofer Advisors publishes a useful primer at soferadvisors.com, and Eqvista at eqvista.com covers the difference from the cap-table and 409A side. For a deeper walk-through of fairness opinions specifically, see our companion guide on what a fairness opinion is and when boards need one.
The 5 types of valuation opinions, in working detail
Each opinion type fits a defined band of rigor, cost, and defensibility. Picking the wrong one is the single biggest avoidable expense in the valuation workflow. The detail below is built from the actual AICPA SSVS No. 1 framework, the USPAP framework, and published practice memos from Mercer Capital, Marshall and Stevens, and Valuation Research Corporation.
A. Calculation of Value
A Calculation of Value is the lightest product. Under AICPA SSVS No. 1, it is the output of a Calculation Engagement, in which the valuation analyst and the client agree in advance to a limited set of procedures and a limited set of valuation approaches. The analyst is not required to consider all relevant approaches or to develop independent judgment to the same level as a full engagement. The report (a Calculation Report) carries a mandatory restriction: it cannot be used as a Conclusion of Value, and it is explicitly not a fair-market-value appraisal under IRS or court standards. Cost runs five to fifteen thousand dollars. Typical uses: a first-pass mediation number in a divorce, an internal owner-planning estimate, an ESOP feasibility study before commissioning a full appraisal, or a starting point for shareholder discussion. It is fast, cheap, and disclosed-as-limited. It is not defensible in an audit or a contested proceeding.
B. Conclusion of Value
A Conclusion of Value is the workhorse. It is the output of a Valuation Engagement under SSVS No. 1, and when filed for tax purposes it must also comply with USPAP Standards 9 (developing) and 10 (reporting), published by the Appraisal Foundation at appraisalfoundation.org. The analyst must consider all three valuation approaches (income, market, asset), select the most appropriate, and document the rejection of any approach not used. The report is either a Detailed Report or a Summary Report, and it includes a defined list of mandated disclosures under SSVS Section 71. Cost runs fifteen to fifty thousand dollars for a small business, fifty to one hundred fifty thousand for a middle-market company, and up to five hundred thousand for a complex multi-entity or international holding. Typical uses: gift and estate tax filings under Internal Revenue Code (IRC) Section 2031 and Section 2032, ESOP transactions, partner buyouts, litigation expert reports, and any situation where a third party (IRS, court, DOL, lender) will scrutinize the number. This is the standard product for serious work.
C. Fairness Opinion
A fairness opinion is the board product. It opines on whether transaction consideration is fair from a financial point of view to a defined party. Issuance is regulated by FINRA Rule 5150, which mandates written procedures for fairness opinions issued by member firms, including procedures to address conflicts of interest, the approval process, the qualifications of the personnel issuing the opinion, and the type of information used. Cost ranges fifty thousand dollars for a small private deal to one million dollars or more for a large public merger. Required, in practice, on every public-company sale of control, every going-private transaction, and every ESOP transaction (the DOL fairness procedure is described in Proposed Regulation 29 CFR 2510.3-18 and the 2014 fiduciary process agreement with Greatbanc, available through the DOL at dol.gov/agencies/ebsa). Delaware courts have made clear that the absence of a fairness opinion, while not always dispositive, weighs against the board in any Revlon-mode sale.
D. Solvency Opinion
A solvency opinion opines on whether a company will be solvent immediately after, and able to pay its debts as they mature following, a defined transaction. The opinion answers three legal tests drawn from Bankruptcy Code Section 548 and state Uniform Voidable Transactions Act (UVTA) statutes: the balance-sheet test (assets exceed liabilities), the cash-flow test (the company can pay debts as they come due), and the adequate-capital test (capital is not unreasonably small). The full Bankruptcy Code text is at law.cornell.edu/uscode/text/11/548. Solvency opinions are commissioned for LBO transactions, dividend recapitalizations, and post-LBO refinancings, where a later bankruptcy would expose the lender or the selling shareholders to a fraudulent-conveyance claw-back. Cost runs fifty to two hundred thousand dollars. Houlihan Lokey publishes one of the more detailed solvency-opinion practice guides at hl.com.
E. Transaction Opinion (DLOM and DLOC)
A transaction opinion is a specialized product that quantifies a Discount for Lack of Marketability (DLOM) or a Discount for Lack of Control (DLOC) on a specific interest. It usually sits inside a Conclusion of Value rather than replacing it. The deliverable explains the methodology (restricted-stock studies, pre-IPO studies, option-pricing models, Mandelbaum factors) and supports the chosen discount with peer-reviewed data. Typical use cases: minority interest gift transfers, Family Limited Partnership (FLP) interests, 409A common-stock valuations where the discount drives the strike-price determination. Cost runs ten to seventy-five thousand dollars when commissioned as a standalone product. Mercer Capital maintains one of the better DLOM study summaries at mercercapital.com.
AICPA SSVS No. 1: the rules every U.S. CPA-issued opinion follows
The AICPA Statement on Standards for Valuation Services No. 1 is the foundational standard for any valuation work performed by a Certified Public Accountant (CPA) or by an Accredited in Business Valuation (ABV) credential holder. It is mandatory. A CPA who signs a valuation report that does not comply with SSVS No. 1 is exposed to a malpractice claim and a state board complaint. SSVS applies to any engagement to estimate the value of a business, business interest, security, or intangible asset. Full text is published by the American Institute of CPAs at aicpa-cima.com.
SSVS defines two engagement types. A Valuation Engagement applies all the approaches and methods the analyst considers necessary, with no scope restrictions agreed in advance. The output is a Conclusion of Value. A Calculation Engagement applies only the procedures the client and analyst agree to in advance, with explicit scope restrictions. The output is a Calculation of Value. The reporting standards are equally specific. A Valuation Engagement can be reported through a Detailed Report (covering all 22 mandatory disclosure elements in Section 71), a Summary Report (a shorter version with the same disclosures, abbreviated), or an Oral Report (recorded in working papers, used only when written reporting is impractical). A Calculation Engagement produces a Calculation Report with abbreviated content and a mandatory restriction-of-use paragraph. The American Society of Appraisers maintains a complementary set of Business Valuation Standards at appraisers.org, which a CPA-ABV will typically follow alongside SSVS.
The 22 disclosures in SSVS Section 71 include: the identity of the client; the purpose and intended use of the valuation; the intended users; the subject interest and its characteristics; the valuation date and report date; the standard of value (typically fair market value, fair value, investment value, or intrinsic value); the premise of value (going concern, liquidation); the scope of work; the assumptions and limiting conditions; the sources of information; the financial information analyzed; the non-financial information considered; the historical operating performance; the industry and economic outlook; the subsequent events considered; the valuation approaches and methods used; the methods not used and why; the reconciliation; the value conclusion; the representation of the analyst; the signature; and the date. Skipping any of these triggers a USPAP non-compliance flag in any subsequent peer review.
USPAP standards for business valuation: Standards 9 and 10
The Uniform Standards of Professional Appraisal Practice is the second pillar. Published by the Appraisal Foundation under congressional authority granted in Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), USPAP is mandatory for any appraisal of a business or intangible asset performed for a federally regulated transaction, including a federally insured loan, an IRS filing, an ERISA fiduciary action, or a federal court proceeding. Standards 9 and 10 are the business-valuation standards. Standard 9 governs development. Standard 10 governs reporting. The 2024-2025 edition is the current text, available at appraisalfoundation.org.
Standard 9 requires the appraiser to identify the client and intended users; the intended use of the appraisal; the type and definition of value; the effective date of the appraisal; the subject of the appraisal; the assignment conditions; and the scope of work necessary to produce credible assignment results. The appraiser must collect, verify, and analyze information necessary for credible assignment results, and must select and apply approaches, methods, and procedures appropriate to the assignment. Standard 10 requires the report to identify the intended users, intended use, type and definition of value, effective date, scope of work, assumptions, and any extraordinary assumptions. The report must contain sufficient information to enable intended users to understand it. The required certification statement at the end of any USPAP-compliant report is reproduced verbatim from the standard.
USPAP is the standard the IRS expects to see. Treasury Regulation Section 1.170A-17 requires a “qualified appraisal” for charitable contributions over five thousand dollars, and the IRS defines “qualified appraisal” by reference to “generally accepted appraisal standards,” which the Service has interpreted in published guidance to mean USPAP. The 2024 USPAP revisions tightened the reporting requirements for restricted reports, clarified the appraiser-independence rules, and updated the recordkeeping period to a minimum of five years after the report date or two years after the conclusion of any litigation in which the appraisal is involved, whichever is later.
The 3 valuation approaches: income, market, asset
Every credible valuation opinion considers three approaches and explains why the chosen approach (or weighted combination of approaches) was used and why the rejected approaches were not. This three-approach framework is codified in Internal Revenue Service Revenue Ruling 59-60, the foundational guidance for fair-market-value determinations of closely held stock, published by the IRS at irs.gov/pub/irs-tege/rr59-60.pdf, and is reinforced in the ASA Business Valuation Standards.
| Approach | Core Methods | Best For | Weakness |
|---|---|---|---|
| Income Approach | Discounted Cash Flow (DCF), Capitalization of Earnings | Operating companies with predictable cash flow | Sensitive to discount-rate and growth-rate assumptions |
| Market Approach | Guideline Public Company Method, Guideline Transaction Method | Companies with credible public or transaction comparables | Comparable selection drives the answer |
| Asset Approach | Adjusted Net Asset Method, Liquidation Value | Holding companies, asset-heavy businesses, distressed situations | Ignores going-concern value above book |
The income approach is the default for an operating business with positive, projectable cash flow. The Discounted Cash Flow (DCF) method projects free cash flow over an explicit forecast period (typically five to ten years), applies a terminal value at the end of that period (using a perpetuity growth model or an exit multiple), and discounts all cash flows back to the valuation date at a weighted average cost of capital (WACC). The Capitalization of Earnings method is a simpler one-period model used when growth is expected to be stable. The market approach uses observed transactions or trading multiples on comparable assets and applies them to the subject. The Guideline Public Company Method draws multiples (enterprise value to revenue, enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA), price to earnings) from publicly traded peers. The Guideline Transaction Method draws multiples from completed merger and acquisition (M&A) transactions. The asset approach restates the balance sheet to fair value and is the default for holding companies and for liquidation-premise valuations. For a deeper look at how each of these is actually computed, see our guide to business valuation formulas, methods, and math, and for the broader question of when to bring in a credentialed appraiser, see our guide on hiring a business valuation expert.
DLOM and DLOC: the most-contested adjustments in the report
Once a baseline value is calculated, two discounts typically apply to a non-controlling, non-marketable interest. These two adjustments are where most IRS audits and most Tax Court fights take place. Get them wrong, and the rest of the report is irrelevant.
The Discount for Lack of Marketability (DLOM) reflects the reduction in value of an interest in a private business compared with an otherwise identical interest in a publicly traded business. The two main empirical data sets are restricted-stock studies (comparing the price of restricted stock to the same issuer’s freely traded stock) and pre-IPO studies (comparing private transactions in a company’s stock to that company’s later initial public offering (IPO) price). Modern practice supplements these studies with option-pricing models (Black-Scholes or Finnerty), which estimate the cost of hedging the marketability risk and produce a DLOM as the ratio of that cost to the underlying value. The Mandelbaum v. Commissioner T.C. Memo. 1995-255 framework (opinion available at ustaxcourt.gov) sets out nine factors a court will weigh in deciding the appropriate DLOM. Mercer Capital, Stout, and Empire Valuation Consultants each publish ongoing DLOM studies updated annually.
The Discount for Lack of Control (DLOC) reflects the reduction in value of a minority interest compared with a controlling interest. The data is typically drawn from control-premium studies (the inverse, calculated from public takeover premiums) published by Mergerstat, FactSet, and Kroll. A DLOC of zero is sometimes appropriate when the entity is structured to give the minority holder effective economic participation equivalent to control (for example, a swing-vote interest or a contractual put right).
| Discount | Typical Range | Drivers of the Range | Leading Methodology |
|---|---|---|---|
| DLOM (private, non-marketable) | 15% to 40% | Holding-period expectation, dividend policy, transfer restrictions | Restricted-stock studies, option-pricing model |
| DLOC (minority interest) | 10% to 25% | Voting rights, swing vote, put rights, governance terms | Inverted control-premium studies |
| Combined (minority interest in a private) | 25% to 55% | Multiplicative, not additive | Multiplied DLOC then DLOM |
Recent Tax Court fights illustrate how live these adjustments are. In Estate of Aaron Jones v. Commissioner T.C. Memo. 2019-101, the Tax Court accepted a DLOM of 35% on minority interests in two timber partnerships, siding largely with the taxpayer’s expert. In Estate of Kress v. United States 327 F. Supp. 3d 1101 (E.D. Wis. 2019), the District Court accepted a combined valuation discount of approximately 27% on a minority interest in a closely held machine-tool company. Both opinions are searchable through the U.S. Tax Court site at ustaxcourt.gov and the federal court records at pacer.gov. The pattern: a well-supported DLOM with documented studies, a credible appraiser, and contemporaneous documentation will usually hold. A round-number DLOM without underlying empirical support will not.
When you need each type of valuation opinion
The opinion you need is driven by the use case. The list below maps the most common situations to the right product and the right standard. Use it as a sanity check before commissioning any engagement.
IRS gift tax filing. Conclusion of Value, USPAP-compliant. The “qualified appraisal” requirement under Treas. Reg. Section 1.170A-13 and the gift-tax adequate-disclosure rules under Treas. Reg. Section 301.6501(c)-1(f) make a Conclusion the floor. A Calculation will not satisfy the regulations.
IRS estate tax filing. Conclusion of Value, USPAP-compliant, as-of either the date of death or the alternate valuation date six months later under IRC Section 2032 (statute text at law.cornell.edu/uscode/text/26/2032).
ESOP transaction. Conclusion of Value from the ESOP trustee’s independent appraiser, plus a fairness opinion from a separate firm. ERISA Section 408(e), 29 U.S.C. Section 1108(e), prohibits a transaction with a party in interest unless adequate consideration is paid; “adequate consideration” is defined by reference to fair market value determined in good faith. The DOL fiduciary-process settlements (Greatbanc, GreatBanc 2014; and subsequent consent agreements) effectively require both opinions for any ESOP transaction.
409A common-stock valuation. Conclusion of Value or a specialized 409A appraisal. Internal Revenue Code Section 409A requires the strike price of stock options to be at or above fair market value at grant. Treasury Regulation Section 1.409A-1(b)(5)(iv) provides a presumption of reasonableness for valuations done by qualified independent appraisers using a methodology described in the regulation.
Small Business Administration (SBA) loan appraisal. Specific SBA Standard Operating Procedure 50 10 6 governs business-valuation requirements for SBA 7(a) loans involving a change of ownership. The current SOP is published at sba.gov and requires an independent qualified-source business valuation when the loan is greater than two hundred fifty thousand dollars or when there is a close relationship between buyer and seller.
Divorce. Jurisdiction-specific. A Calculation may be acceptable at the mediation stage in some states; a Conclusion is required for any contested proceeding. American Academy of Matrimonial Lawyers publishes practice guidance at aaml.org.
M&A board decision. Fairness opinion. The Delaware fiduciary-duty framework under Revlon and its progeny (Paramount Communications, Inc. v. QVC Network, Inc. 637 A.2d 34 (Del. 1994), and In re Trulia, Inc. Stockholder Litigation 129 A.3d 884 (Del. Ch. 2016)) makes a credible fairness opinion the standard cover for a board approving a sale of control.
LBO or dividend recapitalization. Solvency opinion. Lenders and sponsors commission one to defend against later fraudulent-transfer challenges under Bankruptcy Code Section 548 and the UVTA.
Mark-to-market for a fund. Independent valuation from a third-party firm under Accounting Standards Codification (ASC) 820 (Fair Value Measurement), the FASB framework at asc.fasb.org.
Litigation expert testimony. Conclusion of Value, plus the expert must meet the Daubert v. Merrell Dow Pharmaceuticals, Inc. 509 U.S. 579 (1993) admissibility standards in federal court or the state-court equivalent.
Who issues valuation opinions in 2026
The market for valuation opinions splits into five tiers. Each tier carries different cost, signaling, scope, and conflict implications.
Big Four accounting firms. PricewaterhouseCoopers (PwC), Ernst & Young (EY), Deloitte, and KPMG operate large valuation and business-modeling practices serving middle-market and upper-market clients. They are the default for cross-border tax valuations and for public-company financial-reporting valuations under ASC 805 (business combinations) and ASC 350 (goodwill impairment). EY’s valuation thought leadership is published at ey.com.
Independent valuation firms. Houlihan Lokey, Kroll (formerly Duff & Phelps), Marshall and Stevens, Valuation Research Corporation (VRC), Stout, and Lincoln International dominate the independent fairness and solvency opinion market. Houlihan Lokey at hl.com is the historical volume leader for fairness opinions in U.S. M&A. Kroll publishes its valuation handbook at kroll.com. Marshall and Stevens at marshall-stevens.com and Valuation Research at valuationresearch.com are recognized mid-market specialists. Lincoln International publishes its valuations insight series at lincolninternational.com.
Specialized boutiques. Mercer Capital at mercercapital.com, Empire Valuation Consultants at empireval.com, Mintz & Partners, and Pluris Valuation Advisors focus on specific niches (family business, healthcare, financial institutions, restricted securities). Mercer Capital Health Capital Consultants is a recognized leader in healthcare-entity valuation.
Solo credentialed practitioners. CPAs with the Accredited in Business Valuation (ABV) credential, Chartered Financial Analysts (CFAs), and American Society of Appraisers (ASA) Accredited Senior Appraisers run solo or small practices and serve the small-business and gift-tax market. Credential rosters are searchable through the AICPA at aicpa-cima.com and the ASA at appraisers.org.
409A specialists. Eqvista at eqvista.com, Carta at carta.com, Aprio at aprio.com, and Diligent Equity at diligentequity.com serve the venture-backed startup market with software-driven 409A appraisals. They are fast and inexpensive but narrow in scope; they should not be confused with full Conclusion-of-Value providers.
For deeper guidance on selecting an advisor for the broader transaction, see our primer on the role of the M&A advisor, and for owners trying to triangulate value without commissioning an opinion, see how to determine the value of a business.
Cost benchmarks 2026: what each opinion actually costs
Published rate cards, Schedule 14A fee disclosures from public deals, and practice memos from the named firms produce the following 2026 cost benchmarks. These are working ranges, not contractual quotes; conflicts, scope, and complexity move every number.
| Opinion Type | Small Business | Middle Market | Large or Public |
|---|---|---|---|
| Calculation of Value | $5,000 to $10,000 | $10,000 to $15,000 | N/A (not used) |
| Conclusion of Value | $15,000 to $50,000 | $50,000 to $150,000 | $150,000 to $500,000+ |
| Fairness Opinion | $50,000 to $150,000 | $150,000 to $500,000 | $500,000 to $1,000,000+ |
| Solvency Opinion | $50,000 to $100,000 | $100,000 to $200,000 | $200,000+ |
| 409A Valuation | $5,000 to $15,000 | $15,000 to $50,000 | $50,000 to $100,000 (pre-IPO) |
| DLOM / DLOC Standalone | $10,000 to $25,000 | $25,000 to $50,000 | $50,000 to $75,000 |
Two notes on the table. First, the fairness-opinion cost is almost always disclosed in the proxy statement (Schedule 14A) for any public-company transaction; readers can verify ranges by searching EDGAR at sec.gov/edgar/search for any large public deal and reading the “Opinion of Financial Advisor” section. Second, the 409A specialist price reflects automated workflow tools, not a comparable Conclusion of Value, and is not interchangeable with a USPAP-compliant appraisal for any other purpose.
Engagement-letter checklist: what to require before you sign
Most valuation problems are baked in at the engagement-letter stage. The right time to fight about scope is before the work starts, not in a deposition two years later. The list below is the minimum that should appear in any engagement letter for a Conclusion of Value or higher; for a Calculation, the same items apply with the limited-scope restriction added.
Identification. The client and intended users must be named. If the intended users include the IRS or a court, the letter must say so. SSVS Section 21 requires this; USPAP Standard 9 reinforces it.
Purpose and intended use. “Estate tax filing on Form 706,” “ESOP transaction under ERISA Section 408(e),” or “Section 409A common-stock valuation” are acceptable. “General planning” is not, because it does not constrain the standard of value or the report depth.
Standard of value. Fair market value (the IRS standard under Rev Rul 59-60), fair value (the FASB standard under ASC 820 and the state-law dissenters-rights standard), investment value (a specific buyer’s perspective), or intrinsic value (analyst-specific) each produce different numbers. Pick one, and require the appraiser to follow it.
Premise of value. Going concern or liquidation. A holding company in wind-down should not be valued on a going-concern premise.
Valuation date. One date, not a range, unless the engagement is for an alternate valuation date under IRC Section 2032.
Scope. All three approaches must be considered (income, market, asset) unless the engagement is a Calculation, in which case the scope restriction must be explicit. USPAP Standard 9-4 requires the scope to be sufficient to produce credible assignment results.
Credentials. The signing appraiser must hold ABV, ASA, CFA, or equivalent. The letter should name the signing appraiser and require notice before substitution.
Independence. The appraiser cannot have a contingent fee, cannot hold an interest in the subject company, and must disclose any prior engagement with the client. SSVS Section 21(d) makes this mandatory.
Deliverables and timing. A draft report for review, a final report, and an oral readout. A four-to-eight-week timeline is normal for a mid-market Conclusion.
Standard of value: the term that quietly drives every number
Two appraisers using the same data and the same approach will produce different numbers if they use different standards of value. The standard of value is the most-skipped definition in engagement letters, and it is the single biggest source of re-do work. There are four standards in regular U.S. use.
Fair market value (FMV). Defined in IRS Rev Rul 59-60 and Treasury Regulation Section 20.2031-1(b) as the price at which property would change hands between a willing buyer and a willing seller, neither under compulsion to act, and both having reasonable knowledge of the relevant facts. This is the IRS standard for gift, estate, and income tax. It assumes a hypothetical buyer and seller, not a specific buyer.
Fair value. Two different definitions, depending on context. Under FASB ASC 820, fair value is “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Under state corporate dissenters-rights statutes (Delaware General Corporation Law Section 262 and the Model Business Corporation Act Section 13.01), fair value is the value of a dissenter’s shares immediately before the corporate action, excluding any appreciation or depreciation in anticipation of the action and (in some jurisdictions) excluding marketability and minority discounts. Pick the right one; do not assume your appraiser did.
Investment value. The value to a specific buyer, reflecting that buyer’s synergies, financing, tax position, and strategic value. It is the right standard for an internal “what would buyer X pay” exercise but the wrong standard for tax or fiduciary work.
Intrinsic value. An analyst’s view of what a security is “really” worth, separate from market price. Used in securities analysis and some litigation contexts. Almost never used in tax or fiduciary work because it lacks a market-tested anchor.
The takeaway: ask the appraiser to write the standard of value into the engagement letter in the form used in the controlling regulation or statute. “Fair market value” alone is ambiguous. “Fair market value as defined in Revenue Ruling 59-60 and Treasury Regulation Section 20.2031-1(b)” is not.
5 common valuation-opinion mistakes that trigger audits and re-do work
Most valuation problems come from one of five repeating errors. Avoid them at engagement-letter stage.
1. Confusing a Calculation of Value with a Conclusion of Value. A Calculation Report contains a mandatory restriction-of-use clause: it cannot be used as a Conclusion. Filing a Calculation Report with an IRS gift-tax return or attaching one to an ESOP transaction is an audit trigger and an automatic adequate-disclosure failure under Treas. Reg. Section 301.6501(c)-1(f). The fix: when in doubt, commission a Conclusion. A Calculation is fine for internal planning. It is not fine for any external audience.
2. Using the wrong DLOM in a tax context. A round-number DLOM (for example, “25%” with no underlying study citation) will not survive an IRS audit. Tax Court cases (Estate of Jones, Estate of Kress, Estate of Aaron Jones, Mandelbaum v. Commissioner) all emphasize that the discount must be supported by contemporaneous empirical studies and a documented analysis of the Mandelbaum factors. The fix: insist the appraiser cite the studies used and the option-pricing-model output, and document the Mandelbaum factor walkthrough.
3. Missing a credible comparable-transaction set. A market-approach valuation that lists three transactions, all from a different industry segment or a different year, will be challenged. The fix: require the appraiser to document the comparable selection criteria, the size adjustments, and the timing adjustments, and to reject specifically (in writing) the transactions that did not make the set.
4. Single-period income approach without a terminal value. A capitalization-of-earnings calculation that uses one normalized year’s earnings and a single capitalization rate, with no DCF crosscheck and no terminal-value reasoning, will be rejected in court. The fix: a DCF with an explicit forecast period and a defended terminal value (Gordon growth or exit multiple) is the floor for any operating company with growth above a steady-state rate.
5. Skipping the SSVS Calculation Letter Restrictions section. A CPA-issued Calculation Report missing the mandatory restriction language is an SSVS violation. State boards have disciplined CPAs for this. The fix: read the report’s last page; if it does not contain the SSVS restriction paragraph, send it back to the appraiser.
TLDR and 7 takeaways
- A valuation opinion answers “what is it worth.” A fairness opinion answers “is this deal fair from a financial point of view to this party.” They are not interchangeable.
- The five working products are Calculation of Value, Conclusion of Value, Fairness Opinion, Solvency Opinion, and Transaction Opinion. Each carries a different scope, cost, and defensibility profile.
- U.S. valuation opinions follow AICPA SSVS No. 1 and, when filed for federal regulatory purposes, USPAP Standards 9 and 10. Either alone is insufficient for serious work.
- The three approaches (income, market, asset) must all be considered; the chosen approach must be defended in writing, and the rejected approaches must be rejected explicitly.
- DLOM and DLOC are the most-contested adjustments. A round-number discount with no underlying empirical support will not survive an IRS audit or a Tax Court challenge.
- Cost ranges in 2026 run five thousand dollars (Calculation, small business) to one million dollars or more (fairness opinion, large public deal). Picking the right product for the audience is the single biggest cost lever.
- If the audience is the IRS, the DOL, a court, or a board, you need a Conclusion or a Fairness Opinion. A Calculation is for internal use only. When in doubt, climb the ladder.