Glossary · Reading the business
Valuation Gap
In short
This is the difference between what a buyer is willing to pay and what a seller expects for a business. It commonly arises when their perceptions of value do not align.
What it means in a deal
A valuation gap frequently occurs when the seller's asking price, often influenced by subjective factors or future hopes, exceeds the buyer's objective assessment derived from due diligence and a professional business appraisal. You can often bridge this gap by structuring the deal with tools like a seller note or an earnout, tying part of the purchase price to future performance.
Related terms
Common questions about Valuation Gap
- When is an independent business valuation required for a partner buyout?
- What valuation methods are acceptable for assessing goodwill in an SBA acquisition?
- What if the business valuation is insufficient to support the purchase price?
- What is the importance of a professional business valuation for an acquisition?
- Is a separate business valuation required for an SBA 7(a) acquisition loan?
- What happens if my business valuation comes in lower than the purchase price?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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