Valuation Process

What is the valuation process?


Business valuation projects typically involve the following steps, however, client needs and circumstances make every assignment unique.


Phase 1. Understand Your Needs

Our first step is to have an initial conversation to understand your needs. We will discuss with you:

  1. The business to be valued: nature, entity, ownership
  2. Purpose of the valuation (intended use)
  3. The appropriate client(s) and their relationship to the business
  4. The specific ownership interest to be valued
  5. Appropriate standard of value
  6. Date of valuation
  7. Access to information
  8. Special circumstances, factors, challenges or restrictions
  9. Appropriate scope of analysis
  10. Reporting requirements
  11. Intended users of the report
  12. Deadlines and desired timeframe
  13. Client responsibilities


Phase 2. Engagement

After our conversation and some preliminary research, we can estimate our time and costs to complete the work and will provide a letter of engagement. A letter of engagement is signed by the instructing parties and the valuer. It clearly defines the scope of the valuation, basis of valuation, fees and the terms of the engagement.


Phase 3. Discovery

  1. Valuation disclosure statement/questionnaire to be completed by you.
  2. A document request will be sent to you.
  3. Gather requested documents.
  4. Inspect the business and review operations, confidentially.
  5. Conduct any appropriate owner/ management interview(s).


Phase 4. Research & Analysis

  1. Review business information.
  2. Research and analyse the industry and market in which the business operates.
  3. Analyse company financial data, including:
    • 3-5 years financial statement details (when available).
    • Obtain client input and make ‘normalisation’ adjustments.
    • Analyse business financial condition, performance and trends.
    • Calculate financial statistics and relevant financial ratios.
    • Obtain industry data and compare performance.
  4. Identify and assess key business value drivers and risk factors.
  5. Resolve remaining questions regarding history, operations, outlook, market environment, financials, adjusment and assumptions.
  6. Analyse risks and restrictions of the specific inetrest being valued.


Phase 5. Apply Valuation Methods
Consider possible valuation approaches and methods and select those most appropriate.

Cost Approach:
Book Value Method, Adjusted Book Value, Liquidated Book value
Income Approach:
Capitalisation of Earnings, Discounted Cash Flow, Super Profits
Market Approach:
Industry Formula (Rule of Thumb), Price to Earnings, Price to Revenue


Phase 6. Produce the Report

  1. The final step is to write a readable and understandable and defendable report, for the intended users that presents the relevant facts explains the analysis and procedures used, and provides supporting evidence for conclusions.
  2. Review, proof-read and finalise the report
  3. Deliver the report


Confidentiality: We hold your information in the strictest confidence.

Integrity: We carefully consider potential conflicts of interest and our ability to perform the engagement.