1. Confirm what was valued
Check the legal entity, asset, instrument, ownership percentage, share class and unit of account. A conclusion for the whole business is not automatically the value of a minority shareholding or a particular security.
2. Distinguish the dates
The valuation date is the date at which value is assessed. The report date is when the report is issued. Financial information may have a different balance-sheet date. These dates should be clear and reconciled.
3. Understand the basis and premise of value
Read the definition used and the assumed transaction context. Fair value for financial reporting, market value, investment value and a negotiated transaction price are not interchangeable.
4. Read scope, reliance and limitations
Identify who may use the report, the purpose, information relied upon, verification performed, excluded procedures, specialist inputs and material limitations. A report prepared for internal planning may not be suitable for audit, litigation or public disclosure.
5. Follow the methods and weighting
Understand why income, market or asset approaches were selected or rejected. If several methods were used, look for the rationale behind the weighting or reconciliation rather than assuming a simple average.
6. Focus on the assumptions that drive value
Revenue growth, margins, working capital, capital expenditure, terminal growth, discount rates, comparable multiples and security rights may have a large effect. Compare them with historical performance, budgets, external evidence and the wider business plan.
7. Read sensitivities and uncertainty
A single point estimate can create false precision. Sensitivities, scenarios and ranges help show which variables matter and whether the conclusion is robust.
Questions for the valuer or management
- Which information was independently checked and which was management-provided?
- What changed most from earlier valuations?
- Which assumptions are least observable?
- How does the conclusion reconcile to transaction evidence or market indicators?
- What subsequent events may require an update?
- What uses are expressly outside the report’s scope?