Other Business Valuation Purposes

Valuations prepared for specialized purposes often involve different assumptions, standards of value, and reporting requirements than those prepared for transactions or tax filings. Accordingly, the valuation purpose is clearly defined at the outset of each engagement to ensure that the analysis is appropriately scoped and that the resulting conclusions are suitable for their intended use.

Depending on the engagement, the valuation may be prepared to assist with internal planning, ownership decisions, negotiations, legal matters, or advisory discussions. While these valuations may not always be intended for formal filing or submission to third parties, they are nevertheless prepared using disciplined methodologies and well-supported assumptions to provide reliable and meaningful results.

VALUATION APPROACH AND METHODOLOGY

The valuation methodology is selected after evaluating the purpose of the valuation, the nature of the business, the ownership interest being valued, and the intended use of the report. One or more generally accepted valuation approaches may be applied, depending on the facts and circumstances of the engagement.

Under the Income Approach, value is estimated based on the company’s ability to generate future economic benefits. This may involve capitalization of earnings or discounted cash flow analysis, adjusted as appropriate to reflect normalized operating results, growth expectations, and risk characteristics relevant to the engagement.

The Market Approach estimates value by reference to pricing multiples observed in comparable company transactions or other relevant market data. This approach is commonly used when sufficient market information is available and when the subject company can be reasonably compared to similar businesses.

The Asset-Based Approach may be considered in situations where asset values are a significant driver of overall business value, such as asset-intensive businesses, holding companies, or situations involving ownership restructuring or liquidation considerations.

The selected valuation approach or approaches, along with the underlying assumptions and conclusions, are fully explained and documented in the valuation report.

PURPOSE SPECIFIC CONSIDERATION

Depending on the nature of the engagement, the valuation analysis may consider a variety of purpose-specific factors. These may include employee ownership or ESOP plan structures, ownership separation or marital dissolution contexts, early-stage or startup company risk profiles, capital structure considerations, or investor and planning-related objectives.

In some cases, the valuation may be used to evaluate hypothetical scenarios, ownership alternatives, or strategic outcomes rather than to establish a single definitive value for filing or reporting purposes. In such situations, the analysis is clearly framed to reflect its advisory or planning nature, and any limitations or assumptions are appropriately disclosed.

Each valuation is prepared to align with the stated purpose while adhering to generally accepted valuation principles and maintaining consistency, transparency, and analytical discipline.

FINANCIAL STATEMENT REVIEW AND NORMALIZATION

Historical financial statements are reviewed as part of the valuation process and adjusted, where appropriate, to reflect normalized operating results on a market-participant basis. Because financial statements are often prepared for tax or internal reporting purposes, they may include non-recurring, discretionary, or owner-specific items that do not reflect sustainable operating performance.

Normalization adjustments may include owner and related-party compensation, discretionary or personal expenses, non-recurring items, and related-party transactions. These adjustments are intended to present financial results that more accurately reflect the company’s ongoing economic performance in the context of the valuation purpose.

INFORMATION REQUIRED FROM THE CLIENT

To prepare an accurate and defensible valuation for these purposes, we typically request federal tax returns or financial statements for the past three years, if available, along with the most recent interim financial statements. We also request a description of the business, ownership structure, and valuation purpose, as well as any relevant agreements or documents related to the engagement. A completed questionnaire is provided to gather additional background information regarding operations, management, and ownership.

The specific information required may vary depending on the valuation purpose and will be confirmed at the start of the engagement. Additional documents may be requested as needed as the analysis progresses.

TIMELINE AND DELIVERABLE

Once all required information is received, the valuation process can begin. Most valuations prepared for these purposes are completed within 2–3 weeks, depending on the complexity of the business and the availability of information. The final deliverable is a written valuation report tailored to the specific purpose and intended use, with conclusions clearly explained and supported by the analysis.