Checklist for Business Valuations.
Comprehensive business valuations are often unnecessary, in which case less information is needed. Copies of financial statements and income tax returns are the minimum information we need to perform a business valuation. However, if the business valuation is part of a forensic accounting engagement or if the financial statements and income tax returns are unreliable, then other information (such as bank and credit card statements) will be needed in addition to the minimum information.
Financial Statements & Income Tax Returns (Minimum)
- Historical “full year” financial statements (usually for three to five years or whatever represents the business cycle)
- Federal income tax returns for the same years as the historical “full year” financial statements
- Latest interim “partial year or mid-year” financial statements
Other Financial Information
- Aged accounts receivable
- Inventory ledger and inventory costing (including “write-down or write-off”) policies
- Fixed asset or property, plant and equipment (PP&E) ledger
- Aged accounts payable
- Notes or loans payable
- Contingent or “off-balance sheet or unrecorded” liabilities (such as pending or existing lawsuits)
- Related parties (or parties with conflicts of interest) and the details of transactions with such
- Existing contracts or agreements (such as equipment and facility leases)
- Key person or key man whether or not insured with a life insurance policy
- Owners and their percentages of ownership interest
- List of patents, copyrights, trademarks and other intellectual properties and intangible assets
Company Documents
- Articles of incorporation, bylaws and any amendments to either
- Partnership or operating agreement (if not a corporation) and any amendments
- Buy-sell agreement (such as cross-purchase or stock redemption) and related insurance policies
Other Company Information
- Transactions involving company stock, stock options or any changes in ownership
- All prior business valuations or appraisals for any purpose
- All prior purchase or sales agreements or letters of intent (LOI) to buy or sell the company
- Web site and marketing literature (catalogs, brochures, etc.)
- Competitors and any unique critical success factors that sustain the company’s profitability
- Trade association in the industry in which the company operates
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