Consider a sensitivity analysis in your valuation reports

BVWireIssue #182-1
November 1, 2017

To improve the quality of your valuation reports, you may want to include a section on critical assumptions and their impact on your conclusion of value. The section can also include a sensitivity analysis for certain variables, such as cost of capital inputs. Not only can this help with your internal review process, but it can also make a big difference in how end users, particularly the courts, receive your reports.

Judge agrees: “Absolutely,” says the Honorable Thomas Zampino when we asked him whether he’d like to see a sensitivity analysis in valuation reports. Judge Zampino, now retired, served more than 20 years as a Family Court judge in New Jersey, including a stint as presiding judge. Speaking during a recent BVR webinar, the judge says this analysis would be very helpful and would streamline the resolution of cases by translating differences in percentages or inputs into current dollars, which everyone understands.

On the webinar, valuation experts Jay E. Fishman (Financial Research Associates) and William J. Morrison (WithumSmith+Brown), co-authors of The Business Valuation Bench Book, a guide for judges and lawyers, joined the judge.

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