When preparing to sell a business, one of the first steps many Canadian owners take is commissioning a professional valuation. This investment helps establish a realistic asking price, present the business with credibility, and reduce uncertainty for potential buyers.
Sellers often share a summary or complete copy of the valuation in marketing materials or secure data rooms. This transparency speeds up the sales process by showing buyers exactly how the price was determined.
When the Buyer Pays
From the buyer’s perspective, a valuation often takes place during due diligence. The buyer may engage their own advisor to assess whether the asking price is reasonable, review the company’s risk profile, and estimate potential returns. The depth of this review can range from a high-level assessment to an extensive financial analysis, depending on the complexity of the deal.
In these cases, the buyer is usually responsible for the cost of the valuation or financial review. This is part of their broader process to confirm the numbers before moving forward with the purchase.
Internal Buyouts and Successions
For internal transitions, such as family successions, employee purchases, or partner buyouts, the responsibility for paying for the valuation varies. In some cases, the business covers the cost, especially if the valuation serves a larger strategic purpose. In other situations, the cost is shared between parties or built into the overall transaction negotiations.
If the deal is being financed, lenders may require an independent valuation to validate the transaction price. In such cases, the financing institution can influence who pays and determine the type of valuation report needed.
When Both Parties Obtain a Valuation
Occasionally, both the buyer and seller choose to commission separate valuations. This is common when there is disagreement over price or when each side wants its own independent analysis. Differences between valuations often become negotiation points and can lead to more detailed discussions about risk, growth potential, and deal structure. In these situations, a third-party valuation can sometimes serve as a neutral reference to help bridge the gap.
Final Thoughts for Canadian Business Owners
There is no universal rule in Canada about who pays for a business valuation. In most cases, the party who requests the valuation to meet their own goals is the one who covers the cost. Sellers usually pay to prepare for market, buyers often pay during due diligence, and internal transitions tend to involve shared costs.
Regardless of the situation, a professional valuation reduces risk, clarifies expectations, and keeps transactions moving forward. Aspen Valuations provides independent, defensible business valuations tailored to Canadian markets, ensuring you have the clarity and confidence to proceed with your next business move.
