When overhauling an engine, there are four basic choices for the kind of overhaul you want:

Choice 1:  Factory Remanufactured Engine.  This strictly speaking isn't an overhaul, as it results in a zero-timed engine.  You send your run out engine "core" to the factory, either Continental or Lycoming, and you get back an engine that is built to new engine standards.  Some parts are re-used such as crankshafts and cases, but the top end parts are generally replaced with new parts.  Since the factory does the work, they can certify the engine as "zero time" and it counts as a brand new engine as far as the logbook times are concerned.

Here's the Lycoming propaganda on factory remans.

This option is the gold standard for higher-end and more expensive aircraft such as late model Bonanzas and Cessna 210s and twins, where the presence of a factory reman has a noticeable affect on the aircraft's overall price and salability.  A factory reman is also the most expensive option with the least flexibility in terms of options and finish.

If you own one of these more expensive aircraft, and you plan to keep it for several years, then a factory reman is probably the best choice when your engine is run out.

Choice 2:  Factory Overhauled Engine.  The factory overhauls the engine, but the engine is not zero timed.  In theory a modern factory overhaul, where the factories have begun using more new parts, will result in exactly the same engine as a reman.  The key differences are price and lack of a zero-timed fresh logbook, and potentially less risky warranty coverage because the warranty is backed by the factory.

I think factory overhauls are hardly worth it because you pay a premium, don't get a reman's patina of goodness, and you don't get a lot of flexibility in finish.  If you're looking for a non-reman overhaul, I'd go with a name-brand shop.

One downside of factory overhauls and remans is that you generally won't get your own engine parts back.  You'll get somebody else's used case and crankshaft.  If you know yours are no good, this can be advantageous because the factory will replace your worn-out parts, but if you have good parts then you may want to keep them because you know the service history (since you flew them).  A factory reman or overhaul does not give you the option to keep your original parts.  You may or may not care.

Choice 3:  "Name Brand" Overhaul Shop.  There are a number of "name brand" overhaul shops that have enough volume to justify national advertising for their services.  These shops are specialists in engine overhauls and should be the best experts you can find outside of the factory - some would argue they know more than those inside the factory.  Examples include Western Skyways, Mattituck, Penn Yan Aero, and Victor Aviation.

The cheapest overhaul from a name-brand shop is nowadays about the same price as a factory overhaul because the factories have been aggressively competing for overhaul business.  The custom shops usually offer value-added services and customization flexibility that the factory does not offer.  Examples include in-house accessory overhaul, customized matching of parts by weight or fit to tolerances that are tighter than factory tolerances, dynamic balancing, specialized paint schemes, and use of non-OEM parts sources such as Superior Air Parts.  If any of these services are important to you, or you want to have more control over how your engine is built up, then a name brand overhauler is a good choice.  These shops also usually have staying power and a national reputation, which are good for warranty claims and later resale value for your aircraft.

Choice #4:  Field Overhaul.  Any certified Powerplant mechanic with Inspection Authority can perform and sign off an engine overhaul.  The mechanic may or may not be associated with a FBO, although most are.  A field overhaul is often performed locally and so you have the most knowledge of the mechanic, and potentially the most control over the schedule and overhaul options ranging from a completely vanilla service-limits overhaul up to a completely tricked out custom built and finished engine.  It is also potentially the most work for you as owner and is probably the least valued by the marketplace for resale value because buyers of your aircraft usually will not have the same knowledge of and trust in your mechanic that you do.

A field overhauler will almost never have direct access to specialized overhaul tooling and equipment such as cylinder boring and honing machines or valve seat grinders.  In practice this is not an issue because with there are specialty parts overhauler shops that make a business of doing this kind of work and your mechanic will simply send the parts out.

The advantages of a field overhaul are price and flexibility, but the disadvantages are potentially lack of expertise, lack of longevity and reliability if you have a warranty claim, and lack of reputation or consistency which can especially impact resale value.  You have to decide how well you know your mechanic and what his or her record is on overhauls and customer service.

Decision Time

You can get the same quality of engine from each type of overhaul.  Your preferences, schedule flexibility, cash flexibility, and personal knowledge of the overhauler's reputation should drive the choice.  A safest choice, albeit highest-dollar choice, is a factory reman, and if you have a high-dollar aircraft I would always go with the factory reman in order to support the resale value and the salability of the aircraft.  A name-brand overhauler will do a consistently good job.  If you are choosing between a factory or name-brand independent overhauler I personally would go with the name-brand overhauler, because you'll probably get better service and you'll definitely have better flexibility with the name-brand shops.

I personally am absolutely confident in my mechanic's abilities and reputation, and my Bellanca isn't a high-enough valued aircraft to justify the price premium of factory reman.  I also wanted some custom finish options on my engine, so I went with a field overhaul with my mechanic, Rob Regan.

To be honest the real reason I did a field overhaul was to get the experience of performing the overhaul myself, working under the supervision of Rob.  This option is not for everybody, but it really doesn't take any special skills and you learn a tremendous amount about your engine.  I urge folks to give it a try because you'll end up with outstanding knowledge of how your engine works and the confidence of having put it together yourself.

A few common questions that folks ask about doing an overhaul yourself:

Do you have to be an FAA-certified mechanic?  No, you do not, but you must work under the supervision of a certified mechanic.  Further, that mechanic must trust your work enough to put his name and license on the line since as far as the Feds are concerned, whoever signs the logbook did the overhaul.

You need to find the right kind of mechanic to work with, because not all mechanics are willing to have you do the work.  You should also have a good working relationship with your mechanic, because you're going to spend a fair amount of time working together and you're probably going to be asking a lot of dumb questions.

How long will it take?  The answer is really determined by how much time are you going to put into the overhaul.  There is a fixed amount of calendar time that will be consumed by the parts overhaulers, and you most likely cannot change that time.  The time spent disassembling, inspecting and measuring, and reassembling, is the time that you can control.  Working 8 hour days, with all parts, supplies, and tools on-hand, it is possible to do the job in 3-5 days.  Most likely you'll take longer because you don't already know the procedures, because life at the airport is usually full of interruptions, and because of logistical delays for parts and supplies.

From starting to remove the engine from the aircraft, to finish of the first flight, my overhaul took 7 months of calendar time.  This was a very relaxed pace averaging about two full weekends of work per month.  The work included custom painting and overhauling of the engine mount, baffles, and airbox, and it included about 5 weeks of time used by the parts and accessory overhaul shops.

Will it cost significantly more or less than a "normal" overhaul?  The cost delta between a professional overhaul vs. doing the work yourself are largely going to be in labor.  This is a subject to discuss with your mechanic before beginning the overhaul, since your mechanic may spend more time with you than he would if he was working alone.  You can also save a significant amount of labor time if you work alone since presumably your time is "free".

Are there special skills involved?  There are no special skills that are required.  Knowledge of hand tools and mechanical work is helpful but not required.  Aircraft engines are really quite simple (by design) and the procedures for assembly are reasonably well documented.  You will need some special tools beyond standard hand tools, but you can probably use your mechanic's tools if you respect your mechanic's boundaries and tools (you should talk about this out beforehand).

Is it safe?  The real question here is do you trust yourself?  Are you careful, do you follow procedures and checklists, and if there's a possibility of mistake are you willing to undo your work to verify that the assembly is correct?  I personally trust my work more than some anonymous mechanic who I've never met and who will not be flying the aircraft.