Is there a checklist of what a clients needs to have ready before they start the process?

This question pops up all the time. I always say that it is as simple as having a tax return & if not the learn more prompts will tell you exactly what you need for the inputs.  The ideal situation would be to provide the business owner with a list of questions which are needed to most fully complete the 7-step process and thereby most accurately generate an estimate of fair market value.  These questions should include:

Please provide the salary, payroll taxes and benefits paid to each owner and family member.  If tax deductible bonus payments are made to the owners or family members, please include these figures.  Do not provide “distribution” of profit amounts as these are already captured by the pretax income figure entered into Step 3.

For the second (and third, fourth, etc.) owner and each family member, what is the relationship between what they are actually paid (total compensation as defined in 1 above) and the probable cost to replace these individuals at market cost.

     The following chart will capture all of the information needed to enter the correct figure for owner compensation for each business:

                                                Owner 1    Owner 2     Family Member 1     Family Member 2

            Salary and Wages

            Payroll Taxes

            Deductible Bonus 

            Benefits/Perks

            Total Compensation

            Replacement Cost

Were there any one-time, non-recurring, unusual or extraordinary expenses or revenues generated during the past three years?  If so, please describe with dollar amounts included.

Are there any contingent liabilities facing the company?  If so, please describe with dollar amounts included.

Is the real estate which houses the business operations owned by the business or by a related entity?  If so, please provide the following information:

      Is real estate owned by the business or a separate but related entity?

      What is the actual rent being paid (if any) per month?

      What is the probable true market level rent for this property per month?

      What is the current estimated FMV of the subject real estate?

      If owned by the business, what is the current book value of the subject real estate (as of most current              year)?

      If owned by the business, what is the amount of debt associated with the subject real estate?

      If owned by the related entity, what is the amount of debt associated with the subject real                                estate?

What percent of revenues are associated with the three largest clients?

On a scale of 1 to 10 with 1 being devastating and 10 being no impact at all, how would you rank the impact of an unexpected departure of the current owner?

What is the firm’s expected long term revenue growth rate?

What is the firm’s expected long term EBITDA margin?

 What percent of revenues are considered “recurring” in nature?

If the business reports its taxes and books on a cash basis, what is the approximate level of accounts payable and accounts receivable as of the date of valuation?

What year was the company founded?

How many full-time employees are there?