If you are looking into selling a company in your portfolio, a division or even your entire business it might be time to look into getting an independent valuation report. A valuation report does what the name suggests and can inform various financial aspects of business, litigation and personal matters.
A valuation focuses on the details making sure nothing goes unmissed and that’s why it’s important to work with a trusted business valuation company. VSP’s experienced team prepares professional business valuation reports, helping business owners better prepare for an exit or sale and reduce the likelihood of a shareholder or matrimonial dispute over value.
VSP delivers exceptional transaction advisory services in Toronto, the GTA, and all across Ontario, working with you and your team to provide the independent valuation support required in all transaction-related situations to help ensure that the seller receives a fair price and does not ‘leave money on the table’ or, alternatively, help to ensure that the buyer pays a fair price and gets the best possible deal.
What Can a Valuation Report Do For Me?
Valuation reports can be beneficial for more than just a sale, also serving situations ranging from undertaking a growth strategy to a business acquisition to commercial disputes. A professional team can work with you and your team to determine the fair price and ensure you get the best deal possible.
Regardless of whether you are a large corporation or a smaller business, an independent and professionally prepared valuation report gives you comfort in knowing your true financial standing, as it’s easy for things to fall through the cracks, and certain assets to be overlooked or undervalued.
A professional valuator will start by reviewing certain key financial documents (e.g. historical financial statements, income tax returns, major contracts, future cash flow projections, etc.). He/she will then spend considerable time identifying and assessing the risk factors that serve to impact the future cash flow projections (positively or negatively). This is extremely important as the valuation specialist will not simply go off of the paper value as an in-house accountant might.
When Should I Get a Valuation Report?
This may be dictated by a predetermined timeline such as the terms of a buy-sell clause or by the courts/legal system.
Although other circumstances may not dictate the timing of a valuation (e.g. tax/estate planning, exit/succession planning, life insurance needs, value enhancement initiative, etc.), it is never too early to conduct an independent valuation.
Having your business independently valued on an annual or somewhat regular basis means you won’t have to scramble around at the last minute should unfortunate circumstances arise such as death, disability, divorce, departure and disagreement.
It is recommended that you have a valuation performed at least once every two years, given that your business is most likely the largest and most valuable asset in your portfolio.
Types of Valuation Reports
Calculation Valuation Reports can be useful for smaller companies, planning purposes or for negotiating purposes in certain family law matters. This type of report contains a conclusion valuing the shares, interest or assets in a business on a more minimal scale, with little or no corroboration of information, making it the quickest report to prepare.
Estimate Valuation Reports provides a greater level of assurance through more document review and corroboration of underlying assumptions. This is a more detailed report as compared to a Calculation Valuation Report. Estimate reports can be useful for mid- to large-sized companies, transaction purposes or litigation purposes (including commercial, shareholder or matrimonial disputes).
Comprehensive Valuation Reports are the most detailed and in-depth of the three. These provide a very thorough analysis and review of the business, the industry and any other relevant factors, corroborated and set out in a very detailed report. These reports are useful for situations involving public users (e.g. go private transactions, fairness opinions) or litigation matters involving expert testimony.
Protect Your Assets – Get a Professional Valuation Done in Advance
Don’t wait for a potential dispute, divorce, departure, disability or death. Have your company professionally valued today. VSP offers professional, independent and supportable valuation services that will help you make smart and informed business decisions.
Contact us for more information!