Appraisal vs broker opinion of value

Appraisal vs broker opinion of value at a glance

	Credentialed business appraisal	Broker opinion of value (BOV)
Question answered	What is the value under a defined standard, such as fair market value, on a stated date?	What range are buyers likely to pay if this goes to market now, and on what terms?
Who prepares it	A valuation professional holding a designation such as ASA, ABV, or CVA	A business broker or M&A advisor
Standards	USPAP Standards 9 and 10, the AICPA’s VS Section 100, or the issuing body’s own standards	No binding professional standard; quality depends on the broker’s method and candor
Output	A signed report with a conclusion of value, methods, assumptions, and limiting conditions	A pricing range with supporting reasoning, often part of a listing discussion
Built to withstand	IRS review, litigation, audit, regulator scrutiny	A seller’s go-to-market decision
Treatment of deal terms	Usually a cash-equivalent value	Considers seller notes, earn-outs, and buyer types
Independence	Appraiser must be independent; fee cannot depend on the result	Broker usually earns a fee if a sale closes, which is a disclosed interest
Typical use	Tax, estate, gift, divorce, partner dispute, buy-sell, financial reporting	Deciding whether to sell, setting an asking range, judging offers

Neither is better. They answer different questions for different audiences.

What makes something an appraisal?

An appraisal is defined by who prepares it and the standard it follows, not by its length.

USPAP. The Uniform Standards of Professional Appraisal Practice are published by The Appraisal Foundation. The current edition took effect on 1 January 2024 and covers real estate, personal property, business valuation, and mass appraisal. Standards 9 and 10 govern developing and reporting a business appraisal. The Foundation notes that compliance is legally required for state-licensed appraisers in federally related real estate transactions and otherwise applies through professional membership, client contract, or state law. Business appraisers holding the American Society of Appraisers’ business valuation designation follow it.

AICPA VS Section 100. CPAs who value businesses follow the AICPA’s Statement on Standards for Valuation Services. It defines two engagements. A valuation engagement ends in a conclusion of value, with the analyst free to use every appropriate approach. A calculation engagement ends in a calculated value, using only the approaches the analyst and client agreed on. The calculation is quicker and cheaper and carries less weight.

Other credentials. NACVA’s Certified Valuation Analyst designation is open to CPAs and non-CPAs who meet its education and experience requirements, and has its own professional standards.

The tax definition. Where the tax code requires a “qualified appraisal,” 26 CFR 1.170A-17 says it must follow generally accepted appraisal standards, which the regulation ties to the substance and principles of USPAP. The appraiser must have verifiable education plus two or more years of experience valuing that type of property, or a recognized designation. Most tax valuations of private companies also apply the fair market value definition in Revenue Ruling 59-60: the price between a willing buyer and willing seller, neither under compulsion and both reasonably informed.

What is a broker opinion of value?

A BOV is a broker’s estimate of the range in which a business is likely to sell in the current market. It draws on the same three approaches an appraiser uses, which are outlined under valuation methods by license type, but its emphasis is practical:

• Earnings are normalized the way buyers will normalize them, including adjustments that go against the seller.
• The range reflects who the realistic buyers are in that state, what they can get approved for, and how they can pay.
• Structure is part of the answer. In cannabis, with no bank or SBA financing, a price paid partly in a seller note is normal, and the BOV should say so.
• It is dated and perishable. Wholesale prices, new license rounds, and federal tax changes can move it within months.

A good BOV labels every outside figure with its source and date and separates data from opinion. The standard this site tries to follow is visible on the page about dispensary valuation multiples. A BOV is not an appraisal, should not be filed with a tax return, and should not be offered to a court as one. Some states regulate who may give opinions of value for real estate; rules on who may broker a business sale are summarized under business broker licensing by state.

When do you need which?

Situation	What usually fits	Why
Deciding whether to sell, or setting an asking range	BOV	The question is what buyers will pay now
Weighing an unsolicited offer	BOV	Speed, and knowledge of terms in current deals
Gift or estate tax filing, charitable gift of an interest	Qualified appraisal	Tax rules require it and penalties apply to misstatements
Partner buyout under an operating agreement	Appraisal, often by the process the agreement names	See valuation for partner buyouts and disputes
Divorce or shareholder litigation	Appraisal with expert testimony	The court needs an independent, standards-based opinion
Sale to a related party or insider	Appraisal	Supports the price if the IRS, a regulator, or a minority owner questions it
Allocating price among assets after a deal	Often an appraisal of specific assets	See purchase-price allocation
Lender collateral review	Lender-ordered appraisal of real estate or equipment	The lender chooses the appraiser
Buying out an investor at an agreed formula	Calculation engagement may suffice	Both sides have agreed the method

Regulators reviewing a change of ownership generally look at who the new owners are and where the money comes from, not at whether the price was appraised. But a price far from any supportable value can invite questions about hidden interests, which is another reason to document how it was reached.

Why cannabis is hard for both

Accounting firm Withum’s February 2026 review of cannabis valuation notes the core problems: product cannot cross state lines, so each market must be forecast separately; guideline public companies are few and large; and federal tax treatment is changing. Add to that:

• 280E. Pre-tax earnings overstate cash for adult-use operators. A credible report or BOV shows after-tax cash separately.
• Transferability. Fair market value assumes a hypothetical willing buyer. In cannabis the pool of legally eligible buyers may be small, which affects marketability discounts in an appraisal and the realistic range in a BOV.
• Thin comparables. Most private prices are undisclosed. Both documents should say so plainly and avoid false precision.

When hiring an appraiser, ask whether they have valued state-licensed cannabis businesses, which standard and which definition of value they will use, how they will treat 280E and the April 2026 medical rescheduling, and whether the report will be a full valuation or a calculation.

Using both without paying twice

The two can work in sequence. Many owners start with a BOV because it is fast and tells them whether a sale is worth pursuing. If a partner dispute, estate plan, or related-party sale is also in play, they then hire an appraiser, who can use the same normalized financials. Keep the roles separate: the appraiser must be independent of the sale outcome, and the broker’s range should not be presented as the appraiser’s conclusion.

What an initial valuation conversation covers is described on how a cannabis business sale works. This page is educational. It is not legal, tax, or valuation advice, and the broker behind this site is not a credentialed appraiser, attorney, or CPA.