Scope of Work: What Constitutes Reasonable Grounds in a Valuation?

Business Valuation Update
Business Valuation Australia
January 15, 2015
John (Jay) Gibson, CPA/ABV, CVA


One of the most critical areas of professional judgement in a valuation engagement is the extent to which the information is assessed. While judgement is also required in the selection and application of the valuation methodology, in my experience, the major factors for the variance in disputed valuations are different assumptions with respect to the earnings or cash flows adopted and their related growth rates and risk. A properly prepared valuation is one where these assumptions have been based on a sound, appropriate analysis of the available information. But how much analysis is enough?