A document detailing the scope, key assumptions, business valuation methods, and conclusions of a business appraisal assignment.

A business valuation report is a typical work product of a professional business appraisal done for a small business client. The report documents the important elements of the business valuation that meet the client’s objectives while providing consistent and accurate results.

USPAP Standard 10 reports

The Appraisal Foundation publishes the annual USPAP standards. Standard 10 outlines the requirements of a professionally prepared business valuation report. The major sections of a formal business valuation report include:

• A business valuation summary outlining the purpose and scope of the valuation, what is being valued, business valuation methods as well as the standard and premise of business value to be used.
• The date on which the business value has been determined.
• A review of the industry and regional economic conditions affecting the business being valued.
• A discussion of the business itself, including the operational, financial, human resources, sales and marketing aspects and how these influence the business value.
• A review of the business valuation methods used and the business value results they produce.
• The conclusion in which the results from the various business valuation methods are combined into an opinion of the business value.
• A section describing how the business valuation report conforms to professional appraisal standards such as the USPAP.
• Sections describing the key assumptions made and credentials of the business valuation expert.

Statement on Standards for Valuation Services (SSVS No. 1)

In 2007 the American Instutite of Certified Public Accountants has published SSVS No. 1, effective as of January 1, 2008. The standard distinguishes between two types of professional business appraisals:

• Calculation engagement
• Valuation engagement

A business valuation report is the work product of these professional appraisal engagements. SSVS No. 1 specifies several reporting formats.

Valuation engagement report formats

• Detailed report
• Summary report

Calculation engagement report format

• Calculation report

Oral reports are also supported for both types of business appraisal engagements. The typical Detailed Report should include the following:

• Letter of client transmittal.
• Table of contents.
• Introduction.
• Sources of information used for business appraisal.
• Analysis of non-financial information for the business being valued.
• Financial statement analysis and adjustments.
• Valuation approaches and methods used.
• Conclusion of business value.
• Representation and qualifications of the business appraiser.
• Supporting information such as appendices and exhibits.