When private business owners should commission a valuation

Private business owners commission valuations for a range of reasons — a planned sale, a shareholder transaction, an estate or succession plan, a tax reorganisation, or a financial-reporting requirement. Each of those purposes implies a different scope of work and a different level of professional report. The right time to commission a valuation is the point at which a decision needs to be supported by an independent, defensible conclusion of value.

Three common scenarios

A founder considering a sale, a shareholder buyout, or a major reorganisation typically benefits from independent valuation analysis early in the process — well before terms are negotiated. The analysis informs the negotiation rather than ratifying it.

For estate and succession matters, the timing is driven by the planning horizon and the specific tax rules engaged. Engagements are coordinated with the family's tax advisors and counsel.

For financial-reporting matters — purchase price allocations, impairment testing, and similar — the timing follows the reporting cycle. Engagements are coordinated with management and the company's auditors.

What a calculation report buys you

A calculation report is the lightest level of professional valuation work and is appropriate when the engagement does not require the full standard of professional review. It documents the valuator's work and conclusions but at a different level of evidence than an estimate or comprehensive report.

The right level of report is matched to the purpose at hand and recorded in the engagement letter.

This article is for general information only and is not a substitute for professional advice. Specific situations require engagement with a Chartered Business Valuator and, where applicable, tax counsel and legal counsel.