The Valuation Report
Reports are carefully prepared, communicate the
results, and identify the information relied upon in the
valuation process. The wording in the report effectively
communicates the methodology used with supporting documentation,
so that a user of the report could replicate the process.
The basic elements of the report include:
- An introduction, including the report's purpose,
approach, limiting conditions, and scope limitations.
- The company's background, including history, ownership,
management, and physical facilities.
- An industry analysis, including the industry's structure,
background and development, as well as its current economic
conditions, leaders and workforce
- A local, national and international economic outlook
- The valuation methods used, whether asset based,
market, or income approaches
- Valuation methods considered but not used and reasons
for not using the methods
- A financial analysis, including the results of operations
and a balance sheet review of liquidity, leverage, efficiency,
and profitability.
- A discount analysis, including public offering studies
and restricted stock studies regarding marketability
discounts.
- A conclusion of value which incorporates an overview
of control, minority interest, and marketability factors,
and includes an explanation of the valuation methods
used.
- An opinion letter setting forth the basic information
concerning the valuation engagement and its results.
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