If you check the leading standards on business appraisal, all properly done business valuations require some sort of a report. In fact, the venerable Uniform Standards of Professional Appraisal Practice (USPAP) dedicate a complete Standard 10 to specifying the scope and format of a business valuation report.
The idea is to communicate to others what you believe the business is worth. The report also needs to state how you came up with your results. That’s the justification for the background information and methodology discussion you find in professionally prepared reports.
Business appraisal report format – lengthy or brief?
The question is what format should you use to let other business people know about your business valuation conclusions. Modern appraisal standards, such as the AICPA Statement on Standards for Valuation Services (SSVS No 1), give you quite a range of report types to choose from.
For formal valuation engagements you can create a detailed business valuation report that may span well over 100 pages. This fits well with situations that are likely to require a thorough review of your business appraisal. Think of legal disputes, tax authority inquiries or a major investment round.
On the other hand, planning a business sale with a client may be better served by a less formal and more concise valuation report. Such summary reports can be either written or verbal, according to the AICPA SSVS No 1 standard. The goal here is to communicate your results effectively as part of developing an overall marketing strategy for your business sale. A weighty 100+ page report may be an overkill.
As with any business work product, exercise your judgment to decide which report format is best. As a rule of thumb, if your business appraisal will be subject to considerable scrutiny by potentially skeptical readers, go for a full blown, standards compliant, business valuation report.
If your objective is to communicate the substance of your valuation as part of developing a strategic plan, an informal and highly readable valuation report may be all you need.