Read the instructions before reading the number
Identify the entity or ownership interest, valuation date, purpose, basis and intended users. Check whether the company is being considered as a continuing business and what assumptions apply. A conclusion can be reasonable for one brief and unsuitable for another.
Keep the report issue date separate from the date being valued. If the work concerns a historical event, ask which information was available at that time. Later trading should not silently replace the evidence relevant to the agreed date.
Trace the financial starting point
The report should identify the financial periods and records used. Look for a reconciliation where management results differ materially from annual accounts. Group boundaries, discontinued activities and changes in accounting treatment may affect the interpretation of trends.
An information limitation is not resolved by a precise-looking number. If records are incomplete or supplied without verification, the report should explain the extent of work and consequences. Ask whether missing information could change the conclusion and what additional analysis would address it.
Read the earnings bridge in both directions
In a hypothetical case, £180,000 reported EBITDA plus £30,000 of supported exceptional cost, less £20,000 of additional replacement management cost, gives £190,000. The evidence behind each line matters more than the neatness of the total.
Check whether adjustments repeat across periods and whether the costs are necessary to maintain trading. Future savings need a different explanation from historical non-recurring costs. A report should make the category clear and avoid treating every management proposal as an achieved improvement.
Understand method selection and cross-checks
Different methods answer the valuation question using different evidence. An earnings approach needs an appropriate earnings measure and a reasoned comparison; a cash-flow approach needs a coherent forecast and treatment of risk. An asset-based approach has its own relevance and limitations.
Using several methods does not automatically improve the result. Ask why each was selected, how conflicting indications were considered and whether the conclusion depends heavily on one uncertain input. A cross-check should challenge the analysis rather than reproduce the same assumptions in a new format.
Follow the bridge from operating value to the interest
A value for the operating business may need adjustments for relevant cash, debt and other items before reaching equity value. A particular shareholding then requires consideration of its actual rights and the assignment basis. Do not multiply an unexplained headline by your share percentage and assume the work is complete.
Look for consistent dates and definitions across the bridge. A bank balance from one month and debt from another can distort the result. Transaction terms may also make completion proceeds different from an assessed value.
Reproduce one material part of the conclusion
Select a key calculation and follow its source, adjustment and use in the final result. A reader need not rebuild the entire valuation, but should be able to understand a material bridge. If a link is missing, ask a precise question about the evidence or judgement required. That is more productive than challenging the conclusion without identifying the point of disagreement.
| Area | Evidence to examine | Question to resolve |
|---|---|---|
| Starting figure | Named period and financial source | Does the number match the cited record? |
| Adjustment | Amount, explanation and continuing treatment | Is it fact, correction or prospective assumption? |
| Conclusion | Method and reconciliation to the valued interest | Can its effect on the final value be followed? |
Turn questions into a scoped follow-up
List the specific points you cannot trace: an unsupported adjustment, an unexplained comparison or an unclear limitation. Ask the preparer for clarification before commissioning another report. Some disagreements reflect different instructions rather than an arithmetic error.
Consult EFC can discuss a valuation brief or scoped review subject to suitability, access and conflicts. Explain who prepared any existing work and whether you have permission to share it. A review should define whether it provides clarification, methodological observations or a fresh opinion of value.
Your preparation checklist
- Confirm subject, date, purpose, basis and users.
- Reconcile the financial starting point and adjustments.
- Ask why methods and key assumptions were chosen.
- Trace the route from business value to the ownership interest.
Frequently asked questions
Does a detailed report guarantee the value is right?
No. Detail helps only when evidence, judgement and limitations are clear and appropriate to the assignment.
Can two credible reports reach different results?
Yes. Instructions, dates, evidence and judgement can differ. Compare those inputs before treating the difference as an error.
Can a report be used for a new purpose?
Do not assume so. Check its reliance and use terms and discuss whether additional work or new instructions are required.
Sources and scope
This is general preparation guidance. Worked examples are original hypothetical illustrations, not client outcomes, market multiples or individual advice. Agree the purpose, evidence and scope before commissioning professional work.
Professional background: ICAEW business and share valuation resources and IVSC standards overview. These links provide context and do not imply endorsement, assurance or compliance for an individual engagement.
Explore the related questions
Discuss the decision with Consult EFC
Tell us the decision, approximate timing and the information available. We will discuss suitability, scope and fees before work begins. Please arrange a suitable channel before sharing confidential documents.