The objective of performing a business valuation is to reach the intrinsic value of the business. The Intrinsic value is the fair value of the business. To do so, reach the intrinsic value, a comprehensive analysis of the business should be done by independent financial analysts, experienced and capable thats Why Valuation and Valuation Report.
They will articulate the process, the assumptions, and the findings in the valuation report, highlighted by the value or a range of values that they consider the fair value/s. But there are much more insights into the valuation report about business health, arguably, are more significant for investors and financiers than the money value. It gives them the reasons whether to pay the money value, negotiate or pass the investment.
The Valuation Report
It is a comprehensive report about business value, all the values! the process is the same regardless of the size of the business, but we will focus on small and medium-sized businesses (defined as with lower than 250 employees as per WB). Usually, It starts with the content, executive summary, the company historical financial reports for SMEs or the business plan for startups, then the financial data:
The reason for performing the valuation is the main influencer of the method and the kind of report generated. Fundamentally, It should include financial analysis of the historical data, forecasts of the future financials – item by item – and includes at least 3 scenarios, Base case, upper case, and lower case. The report should also include a discussion about the 3 approaches used to value the business:
Read more from zadvisorsgroup.com