The business valuation process involves establishing the standard of value, purpose and valuation date through an engagement letter. It then requires gathering company and industry data, analyzing and normalizing financial statements, and implementing accepted valuation methods like the income, market and asset methods. The process concludes with drafting and reviewing a narrative report that determines the fair value or price of a business.

1. Business Valuation Process
Issue Final Report
Internal Review and QC Process
Draft Narrative Report
Implement Selected Valuation Methodologies
Financial Statement Analysis (e.g., ratios)
Analyze and Normalize/Adjust (if applicable) Historical Financials
Company and Industry Analysis
Data Gathering
Establish Standard of Value , Purpose, and Valuation Date
Proposal and Engagement Letter
Time frame
varies (client
driven), but
typically
ranges from
4 to 6 weeks

2. Accepted Valuation Methods
Traditional
Valuation
Methodologies
Income Method
Discounted Cash
Flow Approach
Capitalization of
Cash Flow
Approach
Market Method
Comparable
Public Company
Approach
Precedent
Transaction
Approach
Asset Method
Net Asset Value
Approach
Leveraged
Buyout
Approach