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At Smythe Advisory, we are often asked to provide quotes for valuation services. In order to provide a reasonable estimate of the cost of preparing a valuation report, it is necessary to obtain some basic information, including:
Now that we have established the basics, it is time to look more closely at the valuation reporting options. Below, you will find descriptions for each type of report, along with examples of the circumstances that might dictate which one is most suitable.
The Canadian Institute of Chartered Business Valuators (CICBV), the leading professional body for valuators in Canada, defines a valuation report as “any written communication containing a conclusion as to the value of shares, assets or an interest in a business, prepared by a valuator acting independently.”
The three types of valuation reports listed in the CICBV Practice Standard No. 110 are as follows:
These reports are distinguished by:
A comprehensive valuation report requires an expanded scope of review, more detailed disclosure in the report, and consequently provides the highest level of assurance.
A calculation valuation report, on the other hand, relies on information provided by management without any independent corroboration, and the report is generally very condensed, providing the lowest level of assurance.
An estimate report falls somewhere in the middle.
Generally speaking, you want to think about what level of assurance is needed, given the purpose of the valuation. If there is a large amount of money at stake, or if the users of the report are not familiar with the company’s business, then you would want greater assurance in the form of a comprehensive valuation report. If the parties using the report are familiar with the business and only want a preliminary indication of value, then less assurance is needed, and a calculation valuation report should suffice.
The following examples will provide some guidance on which type of report might be suitable depending on your circumstance:
It’s important to specify the type of report when getting fee quotes from different valuators to ensure you’re comparing apples to apples.
As a business owner, the value of your business is one of the most important things to understand. If you would like to know more about the value of your business, please get in touch with one of our Chartered Business Valuators.
CPA, CA, CBV
Partner - Advisory Services
Mike has over 25 years of experience providing accounting and business advisory services, with a focus on the Canadian insurance industry.
CPA, CA, CBV
Alex Wong is a partner at Smythe Advisory and is focused on being a trusted business advisor to his clients.
CPA, CA, CBV
Director of Valuation Services
Paul Woodhouse focuses on providing financial advisory and litigation support services to clients.
Gagandeep specializes in M&A advisory engagements, as well as business valuations in the contexts of management buyouts and succession planning.
Arthur’s mandate is to assist Smythe clients in Western Canada in preparing for and executing business divestitures or acquisitions.