All reports are structured in the following manner:

1. Introduction and Background
2. Economic Review and Outlook
3. Industry Review and Outlook
4. Financial Review, Financial Ratios and Projections
5. Valuation Methods - Market, Income and Asset Based Approaches
6. Appendix

Unlike many other valuation firms, Reliant Business Valuation will use ALL THREE valuation methods in our Summary Appraisals: 1) The Income Approach, 2) The Market Approach, and if deemed necessary, 3) The Asset Based Approach.

The Income Approach typically consists of either the Direct Capitalization of Earnings Method, or the Discounted Cash Flow Method. The former is used when earnings are projected to remain constant, while the latter is used when projected earnings will fluctuate for a certain number of years, and then stabilize. The appraiser uses his judgment based on historical financials, among other attributes.

The Market Approach used is the Direct Data Market Method which primarily derives Price to Sales ratios and Price to Sellers Discretionary Earnings ratios from comparable sales. The valuation considers historical and current financial performance and assumes that the business will be sold free and clear of any liabilities and debt.

The Asset Based Approach is also commonly known as the “cost approach” or the “replacement-cost approach.”  In this approach, each component of the business is valued separately.  This also includes the liabilities.  That asset values are totaled, and the total of the liabilities is subtracted to derive the total value of the enterprise

As per the SBA SOP , all reports must:

1. be engaged by lender;
2. be prepared for the lender;
3. include a conclusion of value;
4. include qualifications of the individual performing the valuation;
5. and include a signature with certification page.

Remember, the SBA clearly states in its "Change of Ownership Guidance Form":

1. Was Business Appraisal compliant with USPAP?
2. Did Business Appraiser Clarify/Support Cash Flow and Cap Rate/Multiple Determination?

Many valuation companies do not issue USPAP compliant appraisals; using these type of reports in your SBA file may be risky!

All Summary Appraisal Letter Reports will have the following appraisal procedures:

• Engagement (discuss, agree, retain, sign);
• Information gathering;
• Initial interviews, discussions with parties involved (if required);
• Analyze relevant financial data & descriptive information;
• Identify relevant valuation methodologies;
• Normalize income statements & balance sheets;
• Estimate ongoing earning power;
• Conduct industry/economic research;
• Search for market comparables;
• Conduct valuation analysis (asset, income & market approach);
• Analyze any non-operating or excess assets;
• Apply applicable discounts/premiums;
• Reconciliation & conclusion of value;
• Write report;
• Finalize invoice, engagement & delivery method.

All Summary Appraisal Letter Reports shall minimally set forth in a manner that is clear and not misleading, the following:

• Identify the client, and set forth a description of the business
  enterprise, security or other tangible and /or intangible property being
  appraised.
• Form of the organization and if incorporated, the state of
  incorporation, together with a description, adequate to the assignment, of all classes of securities outstanding and a list of shareholders whose
  interest should, in the appraiser’s judgment be specified. If a partnership,
  the type and the state of filing, together with a list of those partners,
  whether general or limited, whose interest should, in the appraiser’s
  judgment, be specified.
• The purpose (standard of value) of the appraisal.
• The function (use) of the appraisal.
• The definition of the standard of value that is the purpose of
  the appraisal.
• The effective (“as of”) date of the appraisal.
• The date the appraisal report was prepared.
• The report’s assumptions and limiting conditions.
• Any special factors that affected the opinion of value. Such
  factors include, but are jot limited to, buy-sell agreements, restrictive stock agreements, corporate articles, bylaws and resolutions, partnership
  agreements, litigation, regulatory compliance, or environmental hazards.
• Applicable discounts and premiums such as minority interest,
  control, marketability or lack thereof.

For a sample report, or to place an order immediately, please contact Neal Patel, CBA.

* Prices are subject to change at any time. Price above is for a typical 100% controlling, asset-sale business valuation.  Prices can vary depending on complexity of business. Only SBA lenders and banks are eligible for the price noted above. Stock valuations and minority valuations are available for a slightly higher price. Contact Us for pricing.