Engagement Is the Best Indicator of Valuation Quality

A lot of five-figure business valuations are not any better than what ChatGPT can produce with the right instructions—or what you can buy for $250 on Fiverr.

Why?

Because what makes a valuation accurate and useful is not the amount of copy-pasted text, generic charts, or recycled analysis.

What makes a valuation good is how well the valuator gets to know the business—and their experience with real-world transactions.

Large CPA firms have a strong reputation. People trust them because of their size. But they are also known for sticking to heavily standardized methods and often fall short when it comes to acknowledging real-world dynamics—like meeting the buyer and seller at the business itself, a few hundred miles away, after business hours.

Since they do not truly get to know the buyer, the seller, or the business beyond surface-level data, their valuations rarely reflect the actual deal.

These so-called “valuations” are often more like market statistics reports than true assessments of individual companies.

That is why they often fail to outperform ChatGPT—or an overseas freelancer.

While there is little to no correlation between the amount of generic charts, recycled analysis, and boilerplate copy-paste content, there is a real correlation between the level of engagement from the business valuator and the accuracy of the valuation.

Engagement can be defined by how much back-and-forth conversation you’ve had—not by the quality of a presentation.

It can be defined by whether the valuator has visited the business premises and looked at the physical assets.

It can be defined by whether they sent you a one-size-fits-all form to fill out—or actually engaged in real conversation about what’s relevant in your specific case and requested additional documentation for the parts that will move the needle in your specific valuation.

There are currently AI lawyers and AI doctors that one can chat to and get advice, and even though they are likely to become better in the future, they are despite that, not the future of those industries, because they will never take responsibility and be held accountable.

In the business valuation industry, most business valuators already cheat like this, but instead of using an AI chatbot, they are faking their analysis by copy-and-pasting the same “analysis” in all their valuations, while skipping out on the footwork that needs to be done (normalization etc).

Would you hold your doctor accountable if they let ChatGPT answer your questions and you suffered a health concern from it?

Would you hold your lawyer accountable if they let ChatGPT answer your questions (despite you paying them) and you suffered because of it?

If your answer is yes to the above, then will you hold your business valuator accountable if they fail to the footwork, and replace it with boilerplate copy-and-paste analysis that has been recycled from all their valuations?