A professional business valuation report is more than just a number — it is a comprehensive analytical document that explains how an appraiser arrived at their opinion of value. Whether you are receiving a valuation for tax compliance, litigation, a transaction, or estate planning, understanding what a complete report contains helps you evaluate its quality and usefulness. At Corporate Valuations, Inc., our reports follow the standards established by the American Society of Appraisers (ASA) and meet the Uniform Standards of Professional Appraisal Practice (USPAP).

Engagement Letter and Scope

Every report begins by identifying the purpose and scope of the engagement. This section specifies the entity being valued, the interest being appraised (100% or a partial interest), the valuation date, the standard of value (fair market value, fair value, or investment value), the premise of value (going concern or liquidation), and the intended use of the report. These definitions are critical because they directly affect the analytical approach and final conclusion.

Company Description and History

A thorough report includes a detailed description of the business — its history, ownership structure, products or services, customer base, competitive position, and management team. This narrative context helps any reader of the report (including the IRS, courts, or transaction counterparties) understand what makes the business unique and what factors influence its value. The appraiser should demonstrate a clear understanding of the company’s operations and competitive dynamics.

Economic and Industry Analysis

Business value does not exist in a vacuum. A complete report analyzes the national and local economic conditions as of the valuation date, along with the relevant industry outlook. Interest rates, GDP growth, employment trends, and industry-specific factors all affect business value. This section demonstrates that the appraiser considered the broader environment in which the company operates and how macroeconomic and industry trends might impact future performance.

Financial Analysis

The financial analysis section is typically the most detailed portion of the report. It includes a review of historical financial performance over three to five years, ratio analysis comparing the company to industry benchmarks, and a discussion of normalizing adjustments. Normalizing adjustments remove non-recurring items, adjust owner compensation to market rates, and eliminate other items that do not reflect the company’s true earning power. This adjusted financial picture forms the basis for the valuation methods applied.

Valuation Methodology

The report will explain which valuation approaches and methods were considered and applied. The three fundamental approaches are the income approach (capitalizing or discounting expected earnings or cash flows), the market approach (comparing to similar publicly traded companies or completed transactions), and the asset approach (analyzing the company’s net asset value). A thorough report explains why certain methods were selected and why others may have been rejected, supporting each decision with reasoning specific to the company and engagement.

Discounts and Premiums

When valuing less-than-controlling interests or interests in private companies, the report will typically address applicable discounts such as the discount for lack of control (DLOC) and the discount for lack of marketability (DLOM). The appraiser should explain and support each discount with market evidence, empirical studies, and case-specific factors. For gift and estate tax valuations, these discounts are frequently scrutinized by the IRS, making thorough documentation essential.

Conclusion of Value

The conclusion section synthesizes all of the analysis into a final opinion of value. If multiple methods were used, the appraiser explains how the results were weighted or reconciled. The conclusion is stated clearly, along with any assumptions, limiting conditions, or hypothetical conditions that apply. A well-prepared conclusion ties back to every section of the report, so any reader can follow the logic from the company description through the analysis to the final number.

If you need a credible, well-documented business valuation report, contact Corporate Valuations, Inc. Our ASA and CFA credentialed professionals deliver thorough reports that meet the highest professional standards and withstand scrutiny from the IRS, courts, and transaction counterparties.