Insist on the BV data that matter.More is more when it comes to business valuation (BV). That's why if you're a CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. hired to value a company, you must begin by getting as much information as possible about the client's business and the industry it's part of before you give an estimate. Or if you're a financial manager at a company that has hired a valuator, your department needs to get things together for him or her in a timely manner. Thoroughness and cooperation from all parties helps to ensure a smooth process. Here's what should be gathered
* Annual financial statements and balance sheets for the last five years and interim ones for the quarters ending closest to the valuation date, as well as forecasts or projections of future earnings and fees.
* Federal and state income tax returns of the company and any subsidiaries for the prior five years.
Other financial data
* General ledgers, accounting journals, payroll and sales tax sales tax, levy on the sale of goods or services, generally calculated as a percentage of the selling price, and sometimes called a purchase tax. It is usually collected in the form of an extra charge by the retailer, who remits the tax to the government. returns, bank statements and cancelled checks.
* Records of cash accounts and any significant cash investments. An aged accounts-receivable listing and management's estimate of the amount of receivables on the list that will not be collected and an explanation of how those amounts were determined.
* The quantity, a description and the cost of supplies and inventory, as well as the method of pricing the items.
* A fixed-asset register or depreciation schedule that includes all owned real estate and equipment, dates of acquisition, cost of the assets, depreciation method, useful life and the accumulated depreciation accumulated depreciation
The total amount of depreciation that has been recorded for an asset since its date of acquisition. For example, a computer with a 5-year estimated life that was purchased for $2,000 would have accumulated depreciation of $800 [( of each.
* A detailed list of liabilities, notes payable and other interest-bearing debt.
* Operating, capital or fee budgets that project to periods after the valuation date.
* The amounts and the nature of compensation. The valuator should see the schedule of any company-owned life insurance.
* A list of all owners, including the percentage of their individual interests, and the company's organization chart.
* Customer base and size of the marketplace, both geographically and in dollars.
* A description of products or services. The valuator should be apprised of any patents, trade secrets or contracts that prevent competitors from selling items in the company's product lines.
* A list of any suppliers that are the company's sole source of any product. The valuator also should seek information on the general financial health of all suppliers.
* Records of leases and loans and whether they're receivable or payable.
* "Organic" documents (articles of incorporation The document that must be filed with an appropriate government agency, commonly the office of the Secretary of State, if the owners of a business want it to be given legal recognition as a corporation. , bylaws The rules and regulations enacted by an association or a corporation to provide a framework for its operation and management.
Bylaws may specify the qualifications, rights, and liabilities of membership, and the powers, duties, and grounds for the dissolution of an , partnership agreements, articles of organization and operating agreements, for example).
* Any agreements between the owners of the company. The valuator should look at details of any stock options, rights, warrants or deferred compensation plans.
* Board minutes for the past five years.
* Contracts or agreements that will have an impact on future operations.
* Documents related to any current litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute.
When a person begins a civil lawsuit, the person enters into a process called litigation. , including pending or threatened lawsuits.
* Employment agreements of key managers, owners and employees. The CPA/valuator also should review data on employee benefit plans, including the documents establishing the plan as well as the previous five years of the plan's tax returns.
* Reports of examination by any government agency such as the EPA EPA eicosapentaenoic acid.
n.pr See acid, eicosapentaenoic.
n. , OSHA OSHA
Occupational Safety and Health Administration, a branch of the US Department of Labor responsible for establishing and enforcing safety and health standards in the workplace. , the IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. and EEOC EEOC
Equal Employment Opportunity Commission
EEOC n abbr (US) (= Equal Employment Opportunities Commission) → comisión que investiga discriminación racial o sexual en el empleo .
* Patents, copyrights, trademarks or similar intangibles.
* Contingent liabilities including guarantees, warranties or other off-balance-sheet financing Off-Balance-Sheet Financing
A way of raising money that does not appear on the balance sheet.
This is unlike loans, debt and equity, which do appear on the balance sheet. such as letters of credit.
* Property tax assessments and insurance policies covering the company's property.
* The name of, and primary activity at, each location the company maintains. The valuator also needs an estimate of when equipment and facilities will require replacement--and the cost of doing so.
* A list of trade associations (whether company is a member or not).
* The company's standard industrial classification code.
* Trade publications and financial surveys focused on the entity's line of business.
Source: Adapted from Divorce and Domestic Relations domestic relations. For psychological and sociological aspects, see marriage. For legal aspects, see divorce; husband and wife; parent and child. Litigation: Financial Advisor's Guide, by Thomas F. Burrage and Sandra Morgan-Little, John Wiley & Sons Inc., www.wiley.com, March 2003.