Valuation reports – what do they look like?

Valuation reports will typically be comprehensive but easy to understand.  The format will depend on the type of engagement, so for example. a valuation report would typically include:

  • Glossary of relevant valuation terms and appropriate rules and standards followed
  • Engagement & instruction details, purpose of engagement and scope, definition of value and why, key assumptions, information relied upon (contained in appendix), statement of independence and duties to the court
  • Description of the business, business ownership structure and what is being valued (eg. equity or the business)
  • Consideration and description of key customers, products & services, suppliers, competitive advantage and risk profile
  • Consideration and description of relevant industry analysis
  • Analysis of financial information for the last 5 years and analysis of current financial & forecast information, consideration of the accounting policies applied and sources of financial information, eg. audited?
  • Consideration and description of any non business and non recurring income and expenses
  • Consideration and description of appropriate valuation approaches and explanation for the method chosen
  • Consideration and description of any relevant market date, eg. relevant transactions or comparable company data
  • Where relevant, the application of a Discount for Lack of Control and the rationale and support for the discount applied
  • Where relevant, the application of a Discount for Lack of Marketabilty and the explanation and support for the discount applied
  • Where relevant, consideration and description of any surplus assets and liabilities
  • Valuation calculation and explanation
  • Any methods used as a cross check, eg. rules of thumb
  • Consideration of the value applicable to intangible assets, including goodwill
  • Qualifications & experience of author