Financial Valuation Workbook, 5th Edition

CHAPTER 1Valuation Case Study Exercises

1.1 INTRODUCTION

The purpose of this chapter is to highlight and discuss important concepts in valuation through a series of Exercises. These Exercises have been intermittently placed in excerpts of a valuation report. You should attempt to complete these Exercises as you read the report with reasoning and emphasis on an explanation of your conclusion. The authors' solutions to these Exercises can be found in Chapter 2.

The following case presents selected excerpts from a business valuation report that, in its entirety, was in full compliance with the AICPA's Statements on Standards for Valuation Services VS Section 100 and the Uniform Standards of Professional Appraisal Practice. For more information on reports and standards compliance, see Chapters 11 and  12 of Financial Valuation Applications and Models, 5th edition. This report format is one of many that analysts can use in presenting business valuations. The schedules have been included and are referenced throughout. Some of the terms, numbers, sources, and other data have been changed for ease of presentation.

1.2 THE VALUATION REPORT

February 15, 2023

Sherman E. Hitchner, Esq. Hitchner & Wessinger 4747 Washington Street, Suite 1740 St. Louis, Missouri 12345

Re: Fair Market Value of a 100 Percent Equity Interest in Nova Fastener & Tool, Inc. as of December 1, 2022

Dear Mr. Hitchner:

At your request XYZ Appraisal Associates LLC (XYZ) was retained to prepare a valuation analysis ...