{"ok":true,"canonical_url":"https://dealroom.so/glossary/valuation-methodology","api_url":"https://dealroom.so/api/public/glossary/valuation-methodology","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"valuation-methodology","term":"Valuation Methodology","group":"Reading the business","definition":"This is the specific approach used to determine a business's fair market value, often based on income, assets, or market comparisons. It directly impacts your offer price.","what_it_means":"For SBA loans over a certain threshold, an independent business valuation is required. The appraiser will use methods like the asset approach, income approach (e.g., SDE or EBITDA multiples), or market approach. Understand the methodology to challenge or confirm the business's asking price.","url":"https://dealroom.so/glossary/valuation-methodology","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"business-valuation","term":"Business valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"multiple","term":"Multiple","url":"https://dealroom.so/glossary/multiple"},{"slug":"sde","term":"SDE","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","term":"EBITDA","url":"https://dealroom.so/glossary/ebitda"}],"related_questions":[{"question":"When is an independent business valuation required for a partner buyout?","url":"https://dealroom.so/sba-7a/questions/when-is-an-independent-business-valuation-required-for-a-partner-buyout"},{"question":"What valuation methods are acceptable for assessing goodwill in an SBA acquisition?","url":"https://dealroom.so/sba-7a/questions/what-valuation-methods-are-acceptable-for-assessing-goodwill-in-an-sba-acquisition"},{"question":"What if the business valuation is insufficient to support the purchase price?","url":"https://dealroom.so/sba-7a/questions/what-if-the-business-valuation-is-insufficient-to-support-the-purchase-price"},{"question":"What is the importance of a professional business valuation for an acquisition?","url":"https://dealroom.so/sba-7a/questions/what-is-the-importance-of-a-professional-business-valuation-for-an-acquisition"},{"question":"Is a separate business valuation required for an SBA 7(a) acquisition loan?","url":"https://dealroom.so/sba-7a/questions/is-a-separate-business-valuation-required-for-an-sba-7-a-acquisition-loan"},{"question":"What happens if my business valuation comes in lower than the purchase price?","url":"https://dealroom.so/sba-loans/basics/what-happens-if-my-business-valuation-comes-in-lower-than-the-purchase-price"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Valuation Methodology","url":"https://dealroom.so/glossary/valuation-methodology","source_type":"DealRoom Data"}}