Comprehensive valuation report

BDC says the first step in a valuation from a chartered business valuator (CBV) is to decide the level of complexity and assurance needed in the report. BDC says a valuator can prepare three levels, from basic to highly detailed. The comprehensive report is the top level. See how to get a business valuation before selling.

The three levels

BDC describes the estimate report as giving a mid-range level of detail and a higher level of assurance than a calculation report, and the comprehensive report as the most detailed. CBV Institute’s Practice Standard 100 is the foundation for all levels of valuation conclusion: calculation, estimate and comprehensive. CBV Institute adds that even at a calculation level, the least extensive scope of work, significant inputs and assumptions must be supported. Its practice standards address the amount of work required, how an engagement is conducted, how conclusions are communicated and the file documentation kept.

What to ask

• Which level the lender, court, shareholder agreement or other reader requires.
• What scope the engagement letter sets and what documents the valuator will request.
• Which standard of value the report uses. BDC says a valuator determines a stand-alone fair market value to an arm’s-length party, which can differ from the price a buyer pays (see investment value).