While the two terms are often used interchangeably, there is quite a difference between the two.
Appraisals are designed as a quick method to set an approximate price of a business when planning to sell as a whole. They are often done – for free – by business brokers as a part of their marketing their brokerage services to you. The appraisal is a simple assessment based on historical financials and uses comparisons with other similar businesses recently sold.
A Business Valuation is a deeper, more comprehensive assessment of a company’s overall worth, encompassing a wide array of factors: its financials, operations, and industry factors. It involves a comprehensive review of the business, research into economic factors that add to or detract from value. Since it is more detailed and accurate, a business valuation can be used for a wider variety of purposes like buying a business, refinancing an existing business, or the sale of some shares to an employee or family member.