Steps Required to Value Your Company
Phase I – Preliminary Steps: Discuss the details of the Engagement with principals to ensure a complete understanding of the objectives and purpose of the business valuation engagement. Summit appreciates that different valuation purposes dictate alternative approaches.
Phase II – Request a Proposal: Upon gaining a complete understanding of your objectives, we will provide an oral fee quote and written valuation engagement summary. It will define the scope of our service offering, expected timeline and fee for services.
Phase III – Data Gathering: We compile information about your company through detailed questionnaires; shareholder interviews; and financial document review. Our ability to fully understand all financial and operational aspects of a client’s company enables us to better achieve the valuation objective and support our business valuation conclusions. This requires a full understanding of the financial statements and any required recasting adjustments to account for owner benefits; perquisites; one-time and non-recurring expenses; intangible assets; and the operational and industry risk factors that can substantiate higher or lower valuation conclusions. When applicable we work together with our client to generate projections of the anticipated future financial performance.
Phase IV – Research and Analysis: This involves analysis of company documents, financial statements or tax returns, operational information, intangibles, risk factors and other data. Sun researches the economic factors, industry trends and influences, potential risk factors and completed public and private comparable industry transactions. Financial statements are prepared for tax purposes and must be properly interpreted and recast in order to utilize for business valuation purposes.
Phase V – Valuation Preparation: Our reports include a comprehensive presentation of the specific business risk factors; a detailed description of the company and its market positioning; and a review and assessment of the prevailing economic conditions and trends in the specific industry. Detailed recast financial statements are included in the report. We consider, perform and review an array of valuation methodologies to determine which best apply. All assumptions and results are tested for validity. Our goal is to provide a customized, comprehensive and defensible business valuation.
Phase VI – Management Review: A final draft of the report is reviewed with the client and any other professionals involved. The valuation is thoroughly explained to our clients and the associated advisers to ensure a thorough understanding of its conclusions confirm accuracy and enable the report to be fully utilized for the intended purpose. If appropriate, we will make required revisions to the draft and then issue the final report. Summit can update the report as required.