CBV’s Types of Valuation Reports
The required extent of review, analysis and corroboration of economic, industry and company-specific information and factors in respect of a Calculation Valuation Report may be very limited. The scope of work in these engagements require the gathering of valuation research and the application of valuation techniques and methodologies based on information that may be very limited and that may not have been corroborated by the Valuator. Valuators in such circumstances may reasonably not be aware of information or factors that could affect the conclusions reached to an extent that may be significant. Calculation Valuation Reports provide the lowest level of assurance.”
Calculation Valuation Report
Estimate Valuation Report
In comparison to a Comprehensive Valuation Report, Estimate Valuation Reports may be based on a more limited review, analysis and corroboration of economic, industry and company-specific information and factors giving consideration to the purpose of the valuation engagement, taking into consideration the cost of expanding the extent of such review, analysis and corroboration in comparison to the added assurance that will be achieved and the need for such assurance. The scope of work undertaken to support the conclusions of Estimate Valuation Reports normally includes review and analysis of economic, industry and other factors that could significantly affect the conclusions reached.
Comprehensive Valuation Report
In completing a valuation analysis that is suitable for a Comprehensive Valuation Report, the Valuator must use reasonable efforts to obtain, review, analyze and consider all available information and factors that could have a significant affect on the conclusions reached. Further, this information should be corroborated using reasonable efforts to determine whether it can be relied upon for purposes of arriving at a valuation conclusion. Comprehensive Valuation Reports provide the highest level of assurance.
There are three types of Valuation Reports – Comprehensive Valuation Reports, Estimate Valuation Reports and Calculation Valuation Reports. These types of valuation reports “are distinguished by the scope of work, the amount of disclosure provided and the level of assurance provided by the conclusion”.*
*Extracts of Practice Bulletin No. 3 of the CBV Institute (www.cbvinstitute.com)
Typical Valuation Methodologies
We prepare our valuations by assessing all three valuation approaches. Based on the initial information provided by you, we would likely use an earnings (cash flow) method as the primary approach to value the Company.
2) Earnings methods or variations thereof such as capitalization of cash flow or discounted cash flow; and
3) Market methods such as comparable transaction analysis or guideline public company analysis.
1) Asset-based method
Typically, in the valuation of a privately-owned business, there are three generally accepted valuation approaches that are traditionally employed:
We would also use the market and asset-based approaches to test the reasonableness of our value conclusion. These methods may include a review and analysis of data involving M&A transactions of private companies and trading multiples of public companies that operate in the same or similar sector as the Company.
* CBV reports are available through our CBV partners.