Valuation Documents

I get asked from time-to-time about what records should be used to value a business.  Here's a comprehensive list:

1.     Annual financial statements for the last 5 years.
2.     Year-to-date financial statements (balance sheet and profit & loss) for the current year and previous year through the valuation date.
3.     Federal income tax returns for the last 5 years.
4.     Copies of any forecasts or projections for the current year or any future year.
5.     Fixed asset listing or depreciation schedule.
6.     List of notes payable and other interest-bearing debt, including interest rates, due dates, and payment terms.
7.     Schedule of contracts in process and year-end backlog amount for each of the last five years.
8.     Copies of any business plans.
9.     Schedule of owners’ compensation for the current year and the preceding five years.
10.  Contributions made to retirement plans for the benefit of owners for each of the last 5 years.
11.  Schedule of key person life insurance.
12.  List of stockholders or partners, showing the amount of stock or percentage owned by each person.
13.  Organization chart.
14.  List of any customers who generated over 10% of total revenues during the last year, along with the amount or percentage of sales generated.
15.  Details of transactions with owners or related parties, such as rental agreements, during the preceding five years.
16.  Details of benefits provided to owners during the preceding five years, such as personal use of automobile, life or disability insurance, cellular phones, sports or theatre tickets, health club membership, or other personal items paid by the business.
17.  Copies or summaries of significant leases in force, including lease terms.
18.  Copies of stockholder agreements in force as of the valuation date.
19.  Copies of any stock option or stock appreciation rights agreements.
20.  Copies of corporate bylaws and articles of incorporation.
21.  Minutes of board of directors meetings during the preceding five years.
22.  Copies of any buy-sell agreements.
23.  Copies of previous business appraisal or valuation reports.
24.  Details of any litigation, including pending or threatened lawsuits.
25.  Details of any contingent liabilities (such as guarantees or warranties) or off balance sheet financing (such as leases or letters of credit).
26.  Details of transactions in the company’s stock during the last 5 years, as well as any written offers to purchase or sell company stock during the same period.
27.  Website, catalogs, brochures, or other marketing items which provide information on the company and the products/services provided.
28.  Listing of any patents, copyrights, trademarks, or similar intangibles.
29.  Resumes or a summary of the background and experience of all key personnel.
30.  List of the company’s top 5 competitors.
31.  Annual financial statements since inception, including any financial statements prepared by independent CPA firms.
32.  Federal income tax returns since inception.
33.  Sales records by customer since inception, reflecting the amount of sales generated by each customer in each year.
34.  Vendor records since inception reflecting valve purchases from each vendor during each year, including the number of valves purchased and the purchase price.
 
 ​​Contact Mark D. Walters