What Information Must be Reviewed for a Business Valuation Report?

Question: What Information Must be Reviewed for a Business Valuation Report?

When a business owner requests a business valuation report from an appraiser, CPA, or business broker, the owner must compile many documents and gather information to be used in the report. Here is a list of documents that may be requested for a business valuation report.

Answer:

Information Needed to Prepare a Business Valuation Report

1. A detailed description of what is for sale. Is the entire business for sale, or just the assets? Is this going to be a stock sale?
   
2. Details about what is not for sale. Are there specific assets which will not be sold? Are there income streams which will be held back?
   
3. A history of the company, so the appraiser can learn about the company
   
4. Balance sheet for each quarter for the past three to five years (depending on how long the company has been in existence)
   
5. Income statements for each quarter for the past three to five years (depending on how long the company has been in existence)
   
6. Company financial forecasts (balance sheets and income statements) for five years, if available
   
7. Details on the industry and the company's market share in that industry
   
8. Detailed demographic information of the company's market
   
9. A detailed competitive analysis, including top competitors and their products/services
   
10. The company's legal type and ownership structure, including owners and percentages of ownership
    
11. Tax returns for the past three to five years
    
12. Discussion of any audits or IRS scrutiny of the company, and the results of those audits
    
13. All litigation (whether ended or continuing) for the past five to ten years
    
14. Resumes of all company owners (unless a public company), officers, and top management executives
    
15. Current monthly payroll data - number of employees and their functions
    
16. A current organization chart
    
17. A summary of product inventory amounts for each product (from physical inventory) for the past three years
    
18. A listing of all current suppliers
    
19. Information on current customers - a customer list, if possible
    
20. Payment history of customers, including an accounts receivable aging report, for the past three years
    
21. Information on employee benefit plans and costs
    
22. Information on contracts with top executives and managers
    
23. Information on obligations for retirement plans, profit sharing, stock options, and bonuses
    
24. Listing of all intellectual property - patents, copyrights, trademarks/service marks - and all license agreements
    
25. A listing of all business advisers - attorney, CPA, consultants and any contracts or retainers.

This may sound like a lot of information, but all of it is necessary for a valuation expert to gain a complete understanding of the company's financial position, obligations, and management.

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