Frequently Asked Questions
Q What does the appraisal process entail?
A The process varies according to the nature and the complexity of the engagement. Most engagements generally include the following steps:
- Engagement Letter - We issue a letter which describes the specific appraisal assignment, and includes an estimate of fees and time required to complete our work.
- Document Request - At the start of the engagement, we issue a Confidential Information Request (CIR) which outlines the documents we require to complete our appraisal.
- Financial Analysis - We review and analyze the business' historical financial performance.
- Industry & Economic Analysis - We conduct a review and analysis of the economic environment and industry in which the business operates.
- Site Visit and Management Interview - We conduct a tour of the business and meet with management to discuss the industry, current operations, and future plans of the business.
- Valuation Analysis - On the basis of the information gathered in the previous steps, we apply one or more appropriate methods to arrive at our opinion of the value of the business.
- Value Meeting - We conduct an internal meeting among the engagement manager and two principals to review and finalize the preliminary conclusions reached by the engagement manager.
- Summary Conclusions - We provide our value conclusions to the client in the form of a summary letter.
- Final Report - We provide a full narrative appraisal report usually within 3 weeks after submission of our summary letter.
- Ongoing Support - We stand ready to support our conclusions, as needed.
Q How many days does it take to complete a typical business appraisal?
A We typically complete our work within 30-60 days of receiving the information we request.
Q What information is required to perform a business appraisal?
A Specific information varies with the nature of the business and the purpose of our work. We usually request the following:
- Historical financial statements and/or tax returns (usually 5 years), fixed asset depreciation schedules.
- Organization chart, list of officers, list of shareholders.
- Bylaws, Articles of Incorporation, important contracts.
- Marketing/promotional materials.
- Business plan, forecast of sales and earnings (if available).
- Interviews with management in which we gather information on competition, industry trends, the history of the business, its current operations, and plans for the future.
Q How do you bill for your services?
A 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.
Q Will information about my business be held in confidence?
A All of our work is conducted with respect for the confidentiality of our clients' information. Our clients' records are retained in secured, on-site storage. Any client materials not retained in our files are returned to the client or destroyed. We will not share information about you or your business with third parties without your prior consent.
Q What is the American Society of Appraisers?
A 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.
