When performed on a going-concern basis, the valuation of a company is, in general, based on the projected earning of the company. In other words, how much could a hypothetical buyer of the company expect to receive as a return on his or her investment. These projections are based on the current and historical financial condition of the company as represented by the financial information provided to the appraiser. They are also based on company management’s estimate of future earnings.
The entire valuation assignment generally takes approximately six (6) weeks after all pertinent company information has been received by the valuation analyst. This information includes five (5) years of historical financial statements (or tax returns), including the most recent interim statements (or quarterly returns). This information also includes company background information, year of incorporation/formation, management experience, information on facilities, customer base, competition, employees, shareholder/ownership breakdown, extraordinary expenses incurred during the year, and management’s projected earnings for the next five years.
Prior to the completion of the assignment and at around three (3) weeks into the project, a Discussion Draft is sent to management to verify that an accurate financial picture has been presented to GROCO and that the projections made are a realistic expectation of future results. After this Discussion Draft is reviewed and accepted by the company management, the final report is issued. This draft phase is for the appraiser’s benefit. Any attempt to use this phase to control or affect the ability of the appraiser to perform an independent review of the business will not be tolerated.
We hope you found this article about “Valuation Process” helpful. If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page or our website at www.GROCO.com. Unfortunately, we no longer give advice to other tax professionals gratis.
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Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com. GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.
Alan L. Olsen, CPA, Wikipedia Bio
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Introduction (teaching business success at Barr Business School) In this interview, Alan Olsen, CPA, MBA discusses teaching business success with Dr. Frumi Rachel Barr. Dr. Frumi Rachel Barr is the Founder and Chief Mentor at the Barr Business School. Transcript: Alan Olsen Hi, this is Alan Olsen and welcome to American Dreams. My guest today is…
Introduction (one innovative approach to treat congenital heart disease ) In this interview, Alan Olsen, CPA, MBA discusses how regenerative medicine can fight congenital heart disease with featured guest Dr. Timothy Nelson, MD, PhD. Dr. Nelson is a general internal medicine practitioner, with a specialty interest in regenerative medicine and the director of the Todd…
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Introduction In this interview, Alan Olsen, CPA, MBA discusses building financial peace with Mike Bennett. Mike is the Managing Partner of Crewe Capital. Transcript: Alan Olsen Hi, this is Alan Olsen and welcome to American Dreams. My guest today is Michael Bennett. Mike, welcome to the show. Mike Bennett Thanks for having me on. Alan…