Hiring a business valuation provider for the actual decision

A valuation proposal should identify the business or ownership interest, effective date and intended use. A negotiated sale, ownership agreement, tax matter and financial-reporting assignment can require different analyses and reporting. Give the professional the actual purpose and governing documents before asking for a price.

Specify the recipients and any relevant deadline. If counsel, a lender or another professional will rely on the work, involve that person in defining the requirement. A valuation prepared for one purpose may not satisfy another merely because the company and date are similar.

AICPA's valuation standards distinguish engagements culminating in a conclusion of value or a calculated value for covered practitioners. Ask the candidate which type it proposes, the work limitations and the applicable standards. Have the analyst explain the consequence in ordinary language rather than treating a lower-priced calculation as interchangeable with every valuation assignment.

Check relevant qualifications, experience and independence or conflict considerations appropriate to the purpose. Identify the person responsible for the work and review. A credential alone does not establish expertise with your ownership rights, asset mix or intended proceeding; ask for evidence of relevant competence without demanding another client's confidential report.

Ask for the records required and who will verify them. These can include historical financial information, forecasts, ownership documents and explanations of unusual items, depending on the assignment. Identify whether financial cleanup is included or must be performed by another accountant before the analysis begins.

Management should label forecasts and assumptions it supplies, including their approval date. Ask the analyst how it assesses those inputs and handles inconsistencies. A valuation can be sensitive to information beyond the accounting ledger. The engagement should not quietly treat every management projection as an established fact.

Discuss site visits, interviews and specialist input where relevant. Clarify whether the fee includes reviewing contracts or obtaining a separate asset appraisal. If the work depends on legal interpretation, have counsel supply the necessary conclusion through an agreed route.

Request an explanation of the interest valued, purpose, date, assumptions, methods, supporting analysis and limitations suited to the engagement. Ask what schedules the company receives and which licensed data or proprietary tools cannot be transferred. Resolve permitted use and distribution before the report is produced.

Agree how the analyst handles facts learned after the valuation date and changes before delivery. A new transaction or corrected financial record may require discussion. The analyst should identify whether it changes the assignment or the conclusion under the applicable framework, rather than management silently substituting newer inputs into a final report.

Ask whether the engagement includes explaining the report to other advisers, responding to questions or participating in a transaction or proceeding. Price those stages explicitly. A concluded value does not guarantee a buyer's offer, a financing decision or an authority's acceptance.

At delivery, have the analyst walk through the main assumptions and limitations with management. Retain the final report, approved input package and use restrictions. If the company later needs the work for another purpose or date, obtain the analyst's assessment before reusing the conclusion as though the original engagement covered the new decision.