ValuAdder Business Valuation Blog

Business valuation tips, updates and advice. Pick up a few suggestions on how to value a business. Feel free to browse the contents or share your thoughts by leaving a comment.

AICPA has finally done it! After years of work, the latest Statement on Standards for Valuation Services (SSVS No. 1) has been adopted as of January 1, 2008.

While upholding the substance of the earlier USPAP business valuation and reporting standards, SSVS No.1 introduces several new definitions and requirements for professionally prepared business appraisals.

Business valuation engagements

Professional business appraisers and their clients can choose between two main types of business valuation engagements:

  1. Calculation engagement
  2. Valuation engagement

The key difference between the two is in the choice of business valuation approaches and methods.

In a calculation engagement, the business appraiser and client agree up front what business valuation methods will be used to calculate business value.

Under the valuation engagement guidelines, the business appraiser is responsible for choosing all the business valuation methods. The appraiser then uses the results from the different methods to come up with the business value – either as one number or a value range.

See an example of how to do this in Step 5 of the business valuation process: reaching the business value conclusion.

Business valuation report formats

Under SSVS No. 1, the different types of business valuation engagements can be reported in a number of formats.

Calculation engagements are reported in a calculation report. Valuation engagements can be reported in either of the two formats:

  • Detailed report
  • Summary report

Both types of business valuations can be reported in an oral report format.

Here are the key elements that should appear in a Detailed Report:

  • Letter to the client which accompanies the report
  • Table of report contents
  • Introductory sections
  • Information sources used in business value analysis
  • Non-financial information analysis affecting the business being valued
  • Financial statement analysis and adjustment for business valuation
  • Business valuation approaches and methods considered and selected
  • Reconciliation of the different business valuation method results to conclude business value
  • Representation and professional qualifications of the business appraiser
  • Supporting information such as appendices and exhibits

With ValuAdder business valuation software you have complete flexibility to choose from a number of standard business valuation methods under all three approaches: Asset, Market, and Income.

This enables you to address your specific business valuation needs and meet either the SSVS No. 1 calculation or valuation engagement requirements.

The Business Valuation Report Builder includes important language expected of SSVS No. 1 compliant business appraisal reports.

And you can use the power and flexibility of a fully editable Microsoft® Office Word template to complete your business valuation reports in record time!

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