Chapter 14

Site Visits and Interviews


When an appraiser does site visits and management interviews, the appraiser usually gains an improved understanding of the subject company. For this reason, although site visits are not required, more credibility is accorded to an expert who has performed site visits and management interviews than to one who has not.

The primary objectives of site visits and interviews are twofold:

1. To gain an understanding of the subject company's operations and the economic reason for its existence

2. Since “valuation . . . is, in essence, a prophecy [sic] as to the future,”1to identify those factors that will cause the company's future results to be different from an extrapolation of its recent past results

Site Visits

A site visit can enhance the understanding of such factors as the subject company's operations, the efficiency of its plant, the condition of its equipment, the advantages and disadvantages of its location, the quality of its management, and its general and specific strengths and weaknesses.

Management Interviews

Management interviews can be helpful in understanding the history of the business, compensation policy, dividend policy, markets and marketing policies and plans, labor relations, regulatory relations, supplier relations, inventory policies, insurance coverage, reasons for financial analysis to reveal deviations from industry or guideline company norms, and off-balance-sheet assets or liabilities.

Inquiries should be ...

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