Ryan Sanford, ASA, is an associate and accredited business appraiser at ROG+ Partners where he provides business valuation and merger and acquisition advisory services. His work includes analyzing financial statements, building valuation models, conducting economic and industry research, and preparing comprehensive written reports for clients and stakeholders. He brings a strong analytical background and practical industry insight to each engagement. Ryan earned his bachelor’s degree in economics, with a minor in Management, from Clark University in Worcester, Massachusetts.
The Case for an Independent Valuation
January 14, 2026
The New Year is here, and firm leaders across the architecture, engineering, and environmental consulting industry are in the midst of developing their strategic plans, updating forecasts or budgets, and closing the books on 2025. For privately held firms with active ownership programs, closing the books is often followed by the critical exercise of updating the firm's value and share price for any ownership transactions that may occur over the course of the year.
While the share prices of publicly traded firms are determined by market trading, privately held firms must use an alternative method to estimate their fair market value. The two most common methods for establishing value for private companies are independent valuation and stock valuation formulas. In some cases, independent valuations are required for statutory or regulatory purposes, such as for firms that sponsor Employee Stock Ownership Plans (ESOPs). But in most cases, there is no obligation for a firm to establish its value through an independent valuation. In fact, in our A/E Ownership Transition Study published in partnership with Practice Lab, 58% of responding firms indicated that they use a formula to establish their share price, rather than an independent valuation.
Stock valuation formulas can be a useful tool, though even the most effective ones can become outdated following material changes to a firm's operations, the broader economy, the tax code, or the interest rate environment. Formulas tend to rely primarily on valuation multiples (i.e., multiples of revenue or earnings), which are often based on industry rules of thumb or actual stock transactions. Firms may adopt formulas for convenience, as they are cost-effective and simple to administer. However, it is that very simplicity that can lead to inaccurate results.
If not tested and updated regularly (we recommend every 3 to 5 years), a formula-based valuation method can become stale and produce results that no longer reflect a firm's fair market value. In contrast, independent valuations draw on established financial methodologies and provide a forward-looking framework, while also accounting for the company's unique operations and economic conditions. Competent business appraisers analyze a company's future earnings potential and consider relevant market, economic, industry, and company-specific factors to arrive at a more accurate estimate of value. Below are four key reasons to consider utilizing an independent valuation to establish your firm's share price.
Objectivity
Third-party valuations provide an impartial assessment of a company's value, free from biases or conflicts of interest. In firms with active ownership programs, objectivity plays an important role in separating the valuation process from internal dynamics. Credentialed business appraisers are also bound by the Uniform Standards of Professional Appraisal Practice (USPAP), which not only prescribe the process to be followed but also impose ethical, competency, and documentation standards designed to ensure independence and integrity.
Expertise
Professional business appraisers bring expertise in understanding the factors that contribute to a business's value, including market supply and demand forces, investor expectations for returns, the business's risk profile, and more. Appraisers credentialed through organizations such as the American Institute of Certified Public Accountants (AICPA), the American Society of Appraisers (ASA), and the National Association of Certified Valuation Analysts (NACVA) typically develop multiple valuation methods rather than relying on a single method or formula. Professional appraisers utilize comparable guideline public company analyses, discounted cash flow models, and private merger & acquisition comparisons, among others, to triangulate a reliable estimate of fair market value.
Value Added Analysis
Beyond just an estimate of fair market value, appraisers with industry experience can provide meaningful insight into a firm's operating performance. Benchmarking analyses against peer firms and guideline public companies can highlight relative strengths and weaknesses across growth rates, profitability, liquidity, financial leverage, and operating efficiency. This thorough analysis can help firm owners better understand which factors are driving value, and which represent weaknesses to address.
Credibility
A professionally developed valuation report enhances transparency and credibility with shareholders, prospective buyers, and other parties, such as lenders. In the context of internal stock transactions, credibility is particularly important, as perceived fairness often matters as much as the share price itself.
For privately held professional services firms, an independent valuation can ensure your share price reflects current fair market value and enhance oversight of your stock valuation process. While an independent appraisal requires additional time and resources and is more expensive than administering a formula, this is outweighed by the improved accuracy and credibility, the associated risk mitigation, and the actionable insight gained through the appraisal process.
