Valuation report: what is in one, and what makes it evidence
- What assembling it costs in your own time
- $2,730
- Hours to assemble the whole pack
- 36
- Hours a week to be ready in time
- 5
Every figure here comes from the figures you enter and the method stated beside it: your document count, your own hourly worth, your expected price. This site publishes no valuation, no tax position and no legal opinion; what a clause means for your deal is your solicitor's and your accountant's.
A valuation report is a document that has to survive somebody who disagrees with it. That is the whole design brief, and it is why a real one spends most of its length on method and evidence rather than on the conclusion. Whether you are reading one a buyer's adviser produced or commissioning your own, the same questions decide whether it will hold: who prepared it and on what standard, what date it speaks to, what it assumed, and what it excluded. This page says what a report contains and how to read the parts that matter.
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What business valuation reports contain, section by section
A description of the business and the interest being valued. The purpose the report was prepared for and the standard of value that purpose requires. The date it speaks to. The financial information relied on and what was done to it. The methods considered, the methods used, and why the others were rejected. The conclusion, with the reasoning that reaches it. And the appraiser's own qualifications and signature. The IRS sets out its own expectations for developing and reporting a business valuation in Internal Revenue Manual 4.48.4.
The purpose decides the standard, and the standard decides the number
A report prepared for a sale, for a gift, for a divorce, for a lender and for a minority shareholder dispute can reach different figures for the same business on the same day without anybody being wrong. Fair market value, fair value and investment value are different standards, and discounts for lack of control or marketability apply under some purposes and not others. A report that does not state its purpose and standard on the first page is not a report you can rely on for anything.
A business valuation checklist for the week before you ask
Three years of financial statements and tax returns. A list of every adjustment you would make to them, with the evidence for each. Revenue by customer. The lease, the loan agreements and anything that changes on a sale. An asset list with ages and condition. The owner's own role, written honestly. Assembling this before the engagement starts is what turns a long report into a short one, because every item you cannot produce becomes an assumption the appraiser has to write down and qualify.
What makes a report evidence rather than an opinion
Standards and disclosure. Federal tax rules define a qualified appraisal by reference to the substance and principles of the Uniform Standards of Professional Appraisal Practice, developed by the Appraisal Standards Board of the Appraisal Foundation, and set out what the document must contain, including the valuation effective date and the appraiser's qualifications (26 CFR 1.170A-17). That particular rule governs charitable contributions rather than business sales, and it is still the clearest federal statement of the shape a report is judged against.
Will it do what you need for Valuation report?
Tell us where you are in selling your business and what you are trying to keep track of.
Valuation report: common questions
Is a business evaluation report the same thing?
Usually the same document under a different name, and occasionally something much lighter. Ask what standard it was prepared to, what purpose it names and whether the preparer signed it. If the answer to any of those is missing, you are holding a calculation rather than a report, which may be all you need but is not something to put in front of a buyer's adviser.
Is there a business valuation form or a business valuation template to fill in?
There are intake forms, and they are useful for gathering the inputs. There is no form that produces a report, because the part that takes the work is the reasoning between the inputs and the conclusion. A template that promises otherwise is producing a calculation with a cover page on it.
What does a business valuation example actually show?
Mostly the method, which is the transferable part. The figures in any example belong to that business and tell you nothing about yours. What is worth reading in one is the adjustments section and the part where methods are rejected, because that is where the judgement lives and where two competent appraisers most often differ.
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Keeping what you make
The checklist is free. Pro is what happens once a buyer is actually asking: the documents go in as records, each request is tracked against the person who made it, and every version carries the date it was shared, so nobody has to remember which copy anybody has.
- Download the pack as a file you can send on
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- Save the sale file and open it again next week
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- Send a document from inside the file rather than from your inbox
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- Connect QuickBooks or Xero to your account
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