Business Valuation Services FAQ

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While we take into account business owner and management perspectives of the subject company's value, Insight Valuations does not perform engagements to simply arrive at a targeted, desired, or otherwise "predetermined" value. 

Insight Valuations typically performs appraisals on a flat-fee or "not to exceed" basis. These fees typically range from $2,500 to $5,000 for "back of the napkin" valuations for internal or corporate planning purposes. More comprehensive reports, such as those with multi-tiered organizational structures, scenario analyses, or for tax and estate reporting purposes may run up to $15,000.

The facts and circumstances of the engagement may call for a fee outside the ranges presented above depending on the overall needs of the client, the accuracy and clarity of the subject company's financial information, and the required timing of the deliverable.

Under certain circumstances, and as appropriate for the nature of the intended purpose of the appraisal, Insight Valuations may perform analytical work at an hourly rate, to be determined by the nature of the engagement.

The appraisal fee for any given valuation purpose will not be contingent upon the determined value of the subject interest.

Reports are typically delivered within 3 to 4 weeks from receipt of all critical information. Shorter delivery timelines are possible, though they may come with an expedited delivery surcharge. 

• We first determine the required scope of work for the purpose and intended use of the analysis. Generally, Insight Valuations requires 50% of the total engagement fee to be paid before starting work. However, certain engagements may call for a higher retainer payment to start work, either 75% or full payment up front.

• Insight Valuations then sends an information request for the company data pertinent to the appraisal. When sufficient information is received - typically including the subject company's historical financial information, organizational documents, and projections, forecasts, or budgets - we can begin our analysis even if receipt of additional information is pending.

• The valuation analysis occurs over the next 2 to 3 weeks, during which we maintain ongoing conversation with company management to ensure our understanding of the company's industry and service markets, and its operational and financial performance. These conversations include discussions of the company forecast and budgets. If needed, Insight Valuations can develop a company forecast with input and guidance from management.

• When the remaining balance of the total engagement fee is paid, Insight Valuations delivers the draft report to the client.

• After the client and intended users have reviewed the draft report, any questions, comments and suggested revisions are discussed and implemented as appropriate. Any scope changes resulting from these discussions may result in additional fees.

• Once approved, we finalize the draft report.

• Following delivery of the final report, Insight Valuations may allow for additional time (within reason) for follow-up discussions with the intended users of the report at no additional cost. Further or ongoing consultations may call for incremental fees or a transition to an hourly-rate based engagement.

Typically, the final deliverable includes only the finalized appraisal report in electronic (PDF) format.

However, any and all work files may also be provided in PDF format upon request, including any industry and economic reports and other supporting market data used in the analysis.

For an additional fee, Insight Valuations may develop a working forecast or scenario analysis model for the Client's use following the conclusion of the initial engagement.

Unless the facts and circumstances of the engagement preclude consideration of certain methods, or we are otherwise directed to only consider (or not consider) a particular approach or method, Insight Valuations considers development of methods under the Income, Market and Cost approaches.

• Development of the Income Approach usually includes the discounted cash flow (DCF) method or a capitalization of earnings method. These methods most directly consider the subject company's historical and projected financial and operational performance.

• Under the Market Approach, we typically develop indications of value by way of the guideline public company (GPC) method and the guideline transactions (or mergers & acquisitions, M&A) method. These methods apply market-based valuation multiples to the subject company's metrics, providing for an indication of value for the company from the market-based perspective.

• The Cost Approach to a business valuation most often entails development of the Adjusted Book Value (ABV) method. For certain entity types and value premises, such as holding companies or operating companies facing a liquidation scenario, the ABV method may be the primary indication of value. For an operating company that is a going concern, however, an ABV analysis may provide for a basic benchmark representing the lower-range estimate of the subject company's value.

The Uniform Standards of Professional Appraisal Practice (USPAP®) is the generally recognized ethical and performance standards for the appraisal profession in the United States.

USPAP provides standards for all appraisal disciplines, including real property, personal property, business valuation, and mass appraisal.

While the U.S. tax code does not explicitly require adherence to USPAP, it does require appraisals to be performed by a "qualified appraiser" in accordance with "generally accepted appraisal standards." To this point, the IRS considers USPAP to be the benchmark for these standards.

The IRS typically defines a "qualified appraiser as an individual who meets all the following requirements as of the date the individual completes and signs the appraisal.

• The individual either: 1) has earned a recognized appraiser designation from a generally recognized professional appraiser organization for demonstrated competency in valuing the type of property being appraised, or 2) has met certain minimum education requirements and has 2 or more years of experience in valuing the type of property being appraised.

• The appraiser's education and experience must be verifiable.

• The individual regularly prepares appraisals for which they are paid.

• The appraiser makes a declaration in the appraisal that, because of their experience and education, they are qualified to make appraisals of the type of property being valued.

• In the appraisal provided, the appraiser specifies their education and experience in appraising the type of property being valued.

While the precise definition of a “qualified appraisal” may change depending on the applicable tax code section, it is generally defined as an appraisal document that is prepared by a qualified appraiser in accordance with “generally accepted appraisal standards” (discussed below) and otherwise generally complies with the following requirements:

A qualified appraisal for a business valuation should include:

• A description in sufficient detail under the circumstances, taking into account the value of the property, for a person who is not generally familiar with the type of property to understand the nature of the appraised subject property or interest.

• The valuation date or effective date of the appraisal analysis. The valuation or effective date is the date to which the value opinion applies.

• The fair market value, or other required or applicable standard of value, of the subject interest as of the valuation or effective date.

• The name and qualifications to value the type of property being appraised, including the appraiser's education and experience.

• The signature of the appraiser and the date signed by the appraiser.

• The method of valuation used to determine the fair market value, such as the income approach, the market approach, or the cost approach.

• The specific basis for the valuation, such as company projections or a company forecast, specific comparable market or industry metrics and/or sales transactions, including any statistical sampling, among other support and justification for the selected bases developed and employed.