Should I get a second opinion before signing with a broker who claims a high valuation?
Yes — especially if the broker's valuation is well above your own estimate, if they cannot provide comparable transaction data, or if they pressure you to sign immediately. A second opinion can be an informal opinion from another broker or a formal CBV valuation, depending on the level of rigor you need, and it protects you from an overpriced listing that can take longer to sell and ultimately close at a discount.
Why brokers sometimes inflate valuations
Business brokers occasionally inflate valuations during the pitch phase to win a listing, a practice known as "buying the listing." The broker knows an overpriced business will struggle to attract buyers, but secures the exclusive agreement first — often with a tail provision — betting that you will accept a lower price once the market reality becomes clear.
When a broker's comparable selection is biased toward the high end of the range or cherry-picks outlier transactions, the resulting valuation can appear credible on paper while still being unrealistic.
The cost and value of an independent second opinion
An informal broker price opinion (BPO) from a second broker typically costs $500–$3,000. No survey of Canadian CBV fees is published; the cost depends on the level of report (Calculation, Estimate or Comprehensive, with Calculation the least extensive under CBV Institute practice standards), the business's complexity and the valuation's purpose, so ask CBVs for written quotes (see what a CBV valuation costs). The choice depends on how much precision you need. If you are evaluating whether a broker's number is in the ballpark, a BPO is usually sufficient. If you need a defensible valuation for tax planning, estate purposes, or shareholder disputes, a CBV engagement is the appropriate choice.
The cost is minor compared to the risk. Overpriced listings typically take longer to sell than accurately priced comparable businesses. An inflated initial valuation can damage buyer perception even after a price reduction, as buyers interpret the reduction as a signal of seller desperation or undisclosed problems.
Sellers who obtain an independent valuation before listing commonly report higher confidence in their asking price negotiation and fewer disputes over pricing strategy during the engagement.
What a credible second opinion looks like
A credible second opinion should include: a written methodology explanation, specific comparable transaction data or multiples used, and explicit statement of assumptions. The valuator should be able to walk you through which transactions they considered comparable and why, and what adjustments they made for differences in size, profitability, location, or market conditions.
Business valuations from different professionals can differ even when both use credible methodologies. The most common valuation method dispute between brokers and CBV valuators involves broker reliance on market comparables versus CBV asset-based or income-based approaches. This variation is normal — the question is whether both valuations fall within a defensible range, not whether they match exactly.
Red flags that signal you need independent validation
Red flags include:
- The broker's valuation is significantly higher than every other opinion you have received, with no clear explanation for the difference
- The broker cannot name specific comparable transactions or provide evidence that those transactions actually closed at the stated multiples
- The broker dismisses your concerns about the high valuation and pressures you to sign before you can verify their numbers
- The broker's valuation methodology is a single sentence or relies entirely on a rule of thumb without business-specific adjustments
How to interpret conflicting valuations
When two professionals provide different valuations, compare their methodologies and assumptions rather than simply averaging the numbers. Ask each valuator:
- What comparable transactions did you use, and where did you source them?
- What multiples or valuation method did you apply, and why?
- What assumptions did you make about growth, market conditions, or buyer availability?
- What adjustments did you make for my business's specific strengths or weaknesses?
If a broker's valuation requires you to wait for an outlier buyer or assumes best-case market conditions, factor that timing risk into your decision. A slightly lower but more defensible asking price will typically attract more qualified buyers and close faster than an inflated number that sits on the market while you burn through the exclusive term.
This article is for informational purposes only and does not constitute financial, legal, or business advice. Every business sale is different. Before making decisions about valuation, pricing, or engaging an advisor, consult a qualified professional familiar with your specific situation.
Ready to compare broker valuations? Connect with M&A advisors in Canada →