What Kind of Business Valuation Support Do You Need?

The appropriate level of valuation support for you or your client depends primarily on the decision the analysis must support, the intended users, and the degree of scrutiny the work may receive.

BFMV generally provides three forms of support: a consultation, a calculation engagement, or a valuation engagement. The right choice depends not simply on how much analysis you want, but on the decision the work must support, who may rely upon it, how much scrutiny it may receive, and whether an initially private matter could later become a dispute, filing, or other formal proceeding. This guide is intended to help you identify a sensible starting point.

A quick decision guide

• Choose a consultation when you are still defining the issue and want a discussion, market context, or an illustrative analysis. Still, you do not yet need a calculated value or a value conclusion.

  
  

• Choose a calculation engagement when: You need a limited-scope calculated value for planning, an internal discussion, or an early-stage ownership decision.

  
  

• Choose a valuation engagement when: You need a comprehensive, supportable conclusion of value for a transaction, litigation, compliance, reporting, or another formal purpose--especially when outside parties may rely upon or challenge the work.

Side-by-side comparison

Service	Scope	Common Uses	Typical            Deliverable	Typical Cost Structure
Consultation	Flexible	Exploratory questions and early planning	Presentation	Hourly
Calculation Engagement	Limited Scope	Internal planning or ownership discussions	Summary report	Fixed Fee (often significantly less than a valuation engagement)
Valuation Engagement	Comprehensive	Transactions, litigation, compliance, or reporting	Summary or full report	Fixed Fee

1. Consultation: Clarifying your issue before valuing the business

A consultation may be the best starting point when you have value-related questions but are not yet certain what type of assignment you need. You may own the practice, be considering a purchase or sale, or be advising someone whose transaction, dispute, or planning issue is still taking shape.

A consultation may involve calls, email exchanges, or meetings. You and BFMV define the scope through discussion, and it may evolve as the relevant facts become clearer. Because the work is flexible, it is generally billed hourly.

A consultation can help you identify important factors, frame the decision, and determine whether a calculation engagement or valuation engagement is warranted. BFMV may discuss market multiples, value drivers, or an illustrative application of a multiple to EBITDA or another earnings measure. Such information illustrates concepts or possible relationships only; it is not a calculated value, a conclusion of value, or any other indication of value.

A consultation may fit your needs when:

• You are unsure which financial, operational, or market factors matter most to the decision.

  
  

• You are considering a transaction but have not yet defined its terms or the scope of the required analysis.

  
  

• You need help deciding whether a calculation engagement or a valuation engagement would better serve you or your client.

2. Calculation engagement: A limited-scope estimate for your planning or discussion

A calculation engagement may be appropriate when you need an estimate of value but do not require the broader scope of a valuation engagement. You and BFMV agree in advance on the valuation approaches, methods, and extent of procedures to be performed. The resulting calculated value reflects that agreed-upon, limited scope.

Depending on the scope, BFMV may consider financial and operating benchmarks, market transaction data, rates of return, reported earnings, assets and liabilities, and issues involving control or marketability. Because the procedures are limited, the analysis may not address every company-specific factor and may be inappropriate when third parties will rely upon, scrutinize, or challenge the work.

A calculation engagement may fit your needs when:

• You need a calculated value for an ownership discussion, succession planning, or another internal decision.

  
  

• You want a practical baseline and a clearer understanding of the principal factors affecting value.

  
  

• You expect to use the work internally rather than for litigation, regulatory review, or another formal purpose.

3. Valuation engagement: A comprehensive conclusion of value for a formal purpose

A valuation engagement may be appropriate when you need a comprehensive analysis and a conclusion of value for a transaction, litigation, compliance matter, financial reporting purpose, or another use that may involve outside scrutiny. BFMV applies professional judgment to determine the appropriate valuation approaches and methods and performs the company-specific analysis necessary under the circumstances.

That analysis may include the business's historical performance and future earnings potential, relevant industry and transaction data, rates of return, assets and liabilities, and control or marketability considerations. The engagement ordinarily results in a valuation report prepared in accordance with applicable professional standards and designed to support a conclusion of value if regulators, courts, auditors, opposing parties, or other identified users review the work.

A valuation engagement may fit your needs when:

• You need a conclusion of value for a transaction, a compliance matter, a financial reporting purpose, a formal filing, or litigation.

  
  

• You expect outside parties to rely upon, scrutinize, or challenge the analysis.

  
  

• You need the valuation methods, assumptions, and professional judgments to be fully supported in a valuation report.

Match the engagement to the decision you face

The least extensive engagement is not always the most efficient choice, and the most extensive engagement is not always necessary. A calculation engagement may be entirely appropriate for an internal planning decision, but inadequate if the work later becomes part of litigation, regulatory review, or another formal proceeding. Conversely, a consultation may be the best first step when the issue is still taking shape.

The central question is not simply, "How much valuation analysis do I want?" It is, "What decision must this analysis support, who may rely upon it, and how much scrutiny must it withstand?" A preliminary discussion with BFMV can help you determine the appropriate scope based on the decision, the intended users, the timing, and the reasonably foreseeable uses of the work.