Frequently Asked Questions

Valuations are prepared for potential purchasers/vendors looking to buy or sell shares in private companies, matrimonial situations, shareholder disputes, corporate reorganizations and income tax planning, estate planning and reporting purposes, expropriations, shareholder agreements, and in situations where the private and public company shareholdings are either minority interests, escrowed or held in a large block subject to an illiquidity discount.

First, we discuss the purpose of the valuation and the type of valuation report required. Next, we prepare a retainer letter outlining the valuation work to be performed and the costs. Finally, we will issue a list of required information to be gathered by your business in order to get the valuation started.

For more detail, see our blogs, “What you should ask a valuator before engaging them” and “What the valuator should be asking you.”

Once the initial request for information has been gathered, we typically arrange for interviews with key management and a tour of the facilities. These meetings sometimes generate more questions and some additional documents may be required. At the same time, we undertake the relevant economic and industry research, and determine the most appropriate valuation methodologies to employ. Time is then spent preparing the valuation schedules and gathering support for our conclusions. Finally, after the remaining questions are answered and documentation is complete, we prepare a draft of the complete valuation report with a full written narrative and numerical analysis.

The cost for a valuation is unique to the business and circumstances involved.  Providing a recent set of financial statements and a brief discussion will enable us to give you a rough estimate of total cost up front.

If you’re looking for more detailed information about the factors that influence the cost of a valuation, see our blog on that topic.

Usually our finished product takes the form of a report, which includes narrative and accompanying schedules. Our reports are prepared under the professional standards set by the Canadian Institute of Chartered Business Valuators (CICBV). There are three types of Valuation Reports: Comprehensive, Estimate, and Calculation. These reports are distinguished by the scope of review, the amount of disclosure in the report, and the level of assurance provided in the conclusion, with a Comprehensive Valuation Report providing the highest level of assurance (often used for courtroom testimony) and a Calculation Valuation Report providing the lowest level of assurance.

The narrative in all reports must include a description of the asset or shares being valued, the valuation date, the purpose of the report, the scope of the review (what information is relied upon), the major assumptions made by the valuator, the valuation methodology and approach taken to determine value, and a conclusion on value. Comprehensive and estimate reports have a greater level of detail including a description of the business and its operations, an assessment of the industry, competition, prospects going forward, and other key factors specific to the company being valued. In addition, the determination of cost of capital and valuation multiples are disclosed in more detail for a comprehensive report.

The timing of the valuation depends greatly on the size and scope of the business, when the valuation date is set, and how soon the accounting information can be gathered by the client. Before a valuation can begin, we will prepare a list of basic financial information for you to gather.  Having that information is an important part of staying on time and on budget.

In a simple situation where all information is available, a report can be completed in less than a month, sometimes days. However, larger and more detailed reports generally take longer because of the volume of information being reviewed, the complexity of the business, and the necessity to gather most or all of the supporting documents before the detailed analysis can be started. We can provide an estimate of timing after a review of the company’s financial statements, the valuation date, and the availability of information.

Welsh Valuation recognizes that for many businesses, the cost of a valuation report can be significant. However, we also believe that you are retaining a valuator to provide independent, objective expertise and a thoughtful conclusion. There is no sense in providing the final numbers without an understanding of the business and an objective analysis of the financial information. First, you can’t get accurate and insightful valuations without doing the research and analysis that underpins the final valuation number.  Most importantly, a poorly, thought-out report or analysis will cost far more in lost opportunities or fees than saving a few dollars by shortcutting the process.

As an alternative, for more uncertain situations, we can make arrangements to work with our clients up to a certain fee level or block of time, and then we will prepare a brief, preliminary analysis or report of our findings to date, for internal discussion purposes only. At that time, the client or lawyer can assess the situation in order to determine whether it is prudent for us to continue our work. Our hands-on approach ensures fees are appropriately managed and not delegated to others.

We are able to work with potential buyers/sellers in an advisory role. We assess value, investigate as needed and report to the party engaging our services. Sometimes all that is required is a meeting to discuss value. In other circumstances, a client will ask us to become further involved as negotiations continue. We are valuation experts, but buying a business may also involve lawyers, tax advisors, negotiators and accountants. Our partnerships in the professional business community ensure you have the best expertise for your unique situation.

In some ways, they are similar. All reports issued by a Chartered Business Valuator have to meet the standards set by the CICBV. All reports require an understanding of the business, the numbers and the issues. On the other hand, a damages report is very unique to the circumstances of the situation and is often accompanied by larger volumes of relevant accounting data. There is no pre-determined methodology to follow.  We are accountants as well, so crunching numbers in a damage claim is second nature.

We will provide you with a free consultation to discuss your situation. If we are not able to help you directly, we will direct you to another expert better suited to meet your needs. We want you to be served by the best expert for your particular situation.

No, our strict adherence to business valuation and financial litigation means we stick to what we do well. We believe in relationships and reputation. Most of our clients already have an existing relationship with their accountants and income tax experts, and in fact, a majority of our referrals come from accountants and tax practitioners.

No, we work closely with experts in real estate and equipment appraisal. They can provide those services to you directly, without any mark-up on our end. We don’t feel that having a one-stop business for all valuation and financial consulting matters is necessary. Neither do our clients, and many of them are large diverse companies with specialized financial needs in a number of areas.

No, in certain industries, there may be some general rules of thumb, but usually that approach should only be considered a secondary approach to value, and not to be relied upon as a primary method to determine value. It is our experience that rules-of-thumb can be misapplied by people unfamiliar with the valuation process, are relied upon too heavily, and often result in valuations that are significantly different than a more detailed analysis would support.  Many rules-of-thumb vary so significantly as to make them useless. 

It is vital to have experience in litigation and in the major industries that drive our local economy. Welsh Valuation has completed over one thousand business valuations in 30 years, and we have extensive industry experience working with oil and gas (including drilling, services, mining and oil sands), manufacturing, retail, distribution, technology, real estate, pharmaceutical, professional services, and investment holding companies. We leverage our broad range of senior valuation knowledge to solve unique industry solutions no matter the industry on which our valuation is focused.

We address our specific industry and professional experience in our blog, “How much will my valuation cost?”

Using Welsh Valuation means you get access to a valuator with over 30 years of full-time experience and over a thousand assignments in valuing private businesses.  As well, Welsh Valuation has the latest research material and paid subscription data on private market transactions that is normally not subscribed for by others who just dabble in the field.