What does an appraiser need?

The more information in the appraiser’s hands, the more accurate the valuation. Here’s a guide to the information you should make available to your appraiser.

Regardless of the reason for a business valuation, one fact is indisputable: The more information in the appraiser’s hands, the more accurate the valuation. To obtain a business valuation that will stand up in court, attorneys need to ensure the appraiser receives access, at a minimum, to the following information for the company being valued.

Financial data

  • The previous five years’ annual financial statements and balance sheets, and interim reports for the most recent quarters
  • Forecasts of future earnings and fees
  • Five years of federal and state income tax returns for the business and any subsidiaries, as well as payroll and sales tax returns
  • Records of cash accounts and significant cash investments, including aged accounts receivable schedules with estimates of uncollectible receivables
  • Quantity, description and costs of supplies and inventory, along with the pricing method applied
  • Depreciation schedules for all real estate and equipment, with dates of acquisition, costs, depreciation method, useful life and accumulated depreciation
  • List of liabilities and interest-bearing debt
  • Operating, capital or fee budgets projecting future periods
  • Compensation information, including stock options, deferred compensation and employee benefit plans

Operating data

  • List of owners and their respective shares
  • Customer base and market size
  • Product/service descriptions
  • Supplier lists, including information on suppliers’ financial status

Company data

  • Patents, copyrights, trademarks and other intangible assets
  • Contingent liabilities
  • Property tax information
  • Insurance policies
  • Estimates of costs and timing for equipment and facility replacement

Industry data

  • List of all trade associations
  • Trade publications and surveys related to the company’s business

Legal documents

  • Foundational documents, such as articles of incorporation, bylaws and partnership agreements
  • Loan and lease records
  • Five years of board minutes
  • Relevant contracts and agreements
  • Key employment agreements
  • Documents pertaining to current or pending litigation
  • Reports from agencies such as the Occupational Safety and Health Administration, the Equal Employment Opportunity Commission and the IRS