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What does the appraisal process entail?

The process varies according to the nature and the complexity of the engagement. Most engagements generally include the following steps:

  1. Engagement Letter – We issue a letter that describes the specific appraisal assignment, and includes an estimate of the fees and time required to complete our work.
  2. Document Request – At the start of the engagement, we issue a Confidential Information Request that outlines the documents we need to complete our appraisal.
  3. Financial Analysis – We review and analyze the business’ historical financial performance.
  4. Industry & Economic Analysis – We analyze the economic and industry environment in which the business operates.
  5. Site Visit and Management Interview – We conduct a site visit and management interview during which we discuss current operations, facilities, financial history, competition, industry trends, regulatory issues, labor, management, and plans for the future.
  6. Valuation Analysis – On the basis of the information gathered in the previous steps, we select and apply one or more methods to arrive at our opinion of the value of the business.
  7. Value Meeting – We conduct an internal peer review process before finalizing and communicating our opinions.
  8. Summary Conclusions – We initially provide our value conclusions to the client orally or in the form of a summary letter.
  9. Final Report – We provide a full narrative appraisal report.
  10. Ongoing Support – We stand ready to support our opinions as needed.

How many days does it take to complete a typical business appraisal?

We typically complete our work within 30-60 days of receiving the information we request.

What information is required to perform a business appraisal?

Specific information varies with the nature of the business and the purpose of our work. We usually request the following:

  1. Historical financial statements and/or tax returns, typically for the prior 5 years.
  2. Lists of officers, directors, and owners.
  3. Governing documents such as bylaws, articles of incorporation, shareholders’ agreements, partnership agreements, and operating agreements.
  4. Marketing and promotional materials.
  5. List of primary suppliers.
  6. List of key customers.
  7. List of primary competitors.
  8. List/description of facilities.
  9. Business plan and financial projections.
  10. Supplemental information gathered in management interviews, including competitive trends, the industry environment, risk factors, the history of the business, its current operations, and plans for the future.

How do you bill for your services?

We bill for our services on an hourly basis. Prior to starting an engagement, we provide our clients with a carefully developed estimate of our total fees.

Will information about my business be held in confidence?

Yes. All of our work is conducted with respect for the confidentiality of our clients’ information. Our clients’ records are retained in secured, bonded, off-site storage. Any client materials not retained in our files are returned to the client or destroyed.

What is the American Society of Appraisers?

The American Society of Appraisers (the “ASA”) is an international organization of appraisal professionals. The ASA originated in 1936 and is the oldest appraisal organization representing all of the appraisal disciplines. The ASA provides education and professional accreditations in specific appraisal disciplines, including business valuation. The principals of Higgins, Marcus & Lovett, Inc. are all members of the ASA and have earned the designation of Accredited Senior Appraiser, Business Valuation Discipline.

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