BirongAssociates, LLC has three types of valuation services and four levels of reporting to meet the needs of any client. Each of these valuation options is provided below followed by a description of the corresponding reports.
Types of Valuations (Appraisals)
Formal Valuation
A formal Valuation includes the rigorous analysis of all aspects of the subject’s operations. This includes the nature and history of the enterprise; financial and economic conditions affecting the business and its industry; past financial results, current operations (as of the valuation date) and future prospects of the business; the sale of capital stock or other ownership interests in similar businesses; past sales of the subject’s capital stock or other ownership interests; and the economic benefit of both tangible and intangible assets. A formal valuation includes a certified opinion of value and may be presented in the form of a comprehensive appraisal report, a summary appraisal report or restricted use appraisal report, as described below.
Limited Scope Valuation
A limited scope appraisal provides a lower cost valuation alternative. This may include establishing an asking or offer price for a business or for the purpose of SBA financing, for example. The scope of the appraisal process may be limited by the lesser level of research conducted, the use of only those valuation methods which may be effectively used without a more comprehensive level of analysis and the extent to which the appraisal process is detailed in the report. This appraisal level is only applicable in situations where, in the Appraiser’s opinion, a credible estimate of value of the business entity may be developed given these limitations. This level includes a formal certified opinion of value and is presented in the form of a summary appraisal report.
Calculated Estimate of Value
B&A can also develop an informal estimate of the value of a business enterprise. Such engagements may be appropriate when B&A and the client agree that a formal opinion of value is not needed in order to meet the client’s needs, such as the development of an asking or offer price for a business or internal planning. The procedures utilized in this process are less rigorous than those of a valuation, therefore, the results do not include a formal opinion of value. Further, an independent opinion of value resulting from a formal appraisal might be different than the value conclusion from a calculation of value and that difference could be material. A calculation of value may be used only by the client and is not appropriate for any use involving a second party. The results are presented in the form of a restricted use letter report.
Report Levels
Appraisal Report
This report is typically 60 to 80 pages in length and includes detailed explanations of all aspects of the valuation analysis performed by the Appraiser. Comprehensive appraisal reports are recommended for most purposes.
Summary Appraisal Report.
A summary appraisal report is typically 40 to 60 pages in length and summarizes certain information such as the history and description of the business being valued, industry and economic analyses and the analysis of the financial condition of the company, for example.
Restricted Use Appraisal Report
The information provided in a restricted use appraisal report is more limited than the information included in a comprehensive or summary report. As a result, the Appraiser’s opinions and conclusions in the report may not be understood properly without additional information in the Appraiser’s work file. Therefore, this report may be used only by the client and is not appropriate for any use involving a second party.
Restricted Use Letter Report
This report is typically five to seven pages in length and includes only minimum reporting requirements. A letter report is only appropriate in conjunction with a calculation of value. Therefore, this report may be used only by the client and is not appropriate for any use involving a second party.